Scampi merger could push up prices for UK pubs and restaurants
The CMA has found that Whitby Seafoods’ purchase of Kilhorne Bay Seafoods could result in higher prices and lower quality products.
Whitby Seafoods Limited is currently the largest UK supplier of breaded scampi to foodservice customers (such as pubs, restaurants, and fish and chip shops) by some distance, holding a market share close to 90%. Kilhorne Bay Seafoods, while significantly smaller than Whitby Seafoods, is the second largest supplier.
Whitby Seafoods agreed to buy Kilhorne Bay Seafoods on 2 May 2023 and voluntarily notified the deal to the Competition and Markets Authority (CMA), which launched a merger review into the deal on 8 August 2023.
An initial Phase 1 investigation conducted by the CMA has found that Whitby Seafoods already holds a very strong market position in the supply of breaded scampi to foodservice customers. Following the deal, Whitby Seafoods would face even less competition from other scampi suppliers. The CMA’s investigation also found that Whitby Seafoods faces limited competition from potential market entrants and suppliers of other types of breaded seafood.
The loss of competition brought about by the deal could result in foodservice customers having to pay higher prices – which could ultimately lead to higher prices for customers in venues such as pubs, restaurants, and fish and chip shops – as well as reduced product quality.
The CMA will refer the deal for an in-depth Phase 2 investigation unless Whitby and Kilhorne Bay offer remedies which fully resolve these concerns. They now have 5 working days to submit proposals.
Colin Raftery, Senior Director of Mergers at the CMA, said:
Scampi is a popular choice when eating out in the UK, with over 20 million servings sold to restaurant, café, and pub goers every year.
These venues are already facing significant cost pressures, and it’s critical that we don’t allow a loss of competition to make things worse.
Kilhorne Bay is a relatively small player, but Whitby Seafoods already faces only very limited competition when competing for foodservice customers – so the deal would leave customers facing the risk of higher prices and lower quality products.
For more information, visit the Whitby Seafoods / Kilhorne Bay Seafoods merger inquiry page.
Notes to editors
- All media enquiries should be directed to the CMA press office by email on press@cma.gov.uk, or by phone on 020 3738 6460.
- The CMA believes that the merger gives rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the wholesale supply of breaded scampi products to foodservice customers (not including supermarkets) in the UK.
- Under the Act the CMA has a duty to make a reference to Phase 2 if the CMA believes that it is or may be the case that a relevant merger situation has been created, or arrangements are in progress or contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
- The CMA’s investigation found no concerns regarding the supply of the breaded scampi products to the retail sector, such as supermarkets, as Kilhorne Bay is not active in this market.