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Last Updated: Wednesday, 26 October 2005, 16:00 GMT 17:00 UK
Watchdogs probe HP sauce takeover
HP Sauces
Would the takeover deal give Heinz too much sauce?
The takeover of the firm which makes HP sauce by US food giant Heinz has been referred to UK competition authorities.

The Office of Fair Trading (OFT) said the 470m ($855m) acquisition by Heinz of HP Foods could mean higher prices for brown sauce and tomato ketchup.

UK-based HP Foods, which also makes sauces under the Lea & Perrins, Daddies and Amoy names, was sold by French group Danone in June.

The takeover would make Heinz the leading seller of sauces in the UK.

'Higher prices'

The OFT said the deal could reduce competition in several product areas.

Heinz is confident that this acquisition will meet the criteria for final clearance
Jane Miller, head of Heinz UK and Ireland

"As a result of the merger, retail customers and consumers could suffer from less competition resulting in higher prices for products such as HP brown sauce, tomato ketchup and baked beans," said Vincent Smith, the OFT's head of competition enforcement.

The OFT said it had decided to refer the deal to the Competition Commission, which now has 24 weeks to report on its findings.

Heinz, which is famous for its own-brand baked beans and tomato ketchup, said it remained confident that its takeover of HP Foods would eventually be approved by the UK's competition authorities.

"It is not unusual for acquisitions of this magnitude to be referred to the Competition Commission to ensure that any potential concerns are addressed," said Jane Miller, head of Heinz in the UK and Ireland.

"Heinz is confident that this acquisition will meet the criteria for final clearance. This deal has already received approval from the merger authorities in Ireland and Germany."

The OFT can refer deals for investigation if it believes there could be "a substantial lessening of competition" resulting from a takeover.

Heinz employs more than 5,000 staff at five sites across the UK. HP Foods employs about 450 workers in the UK.

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