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The Netherlands Authority for Consumers and Markets (ACM) has blocked Zwanenberg Food Group’s proposed acquisition of Unox from Unilever, citing concerns that the deal would reduce competition and lead to higher prices for supermarkets and consumers.

The transaction would have given Zwanenberg a market share of approximately 60-85% in the Dutch markets for smoked sausages, boiled sausages and ambient wet soups, according to the regulator.

ACM said the acquisition would have made Zwanenberg ‘practically the only major supplier’ of smoked and boiled sausages to Dutch supermarkets, while also giving the company a strong position in ambient wet soups.

Martjin Snoep, chair of the board of ACM, said: “We wish to prevent individuals from being confronted with higher prices as a result of this planned acquisition. It would have resulted in one competitor gaining too strong a position in the markets for ambient sausages and wet soups. That would have left supermarkets with fewer supplies to choose from and the risk of price increases in their stores.”

ACM said its investigation found that supermarkets had raised concerns about the potential for price increases following the acquisition.

The deal would have combined Zwanenberg’s position as a supplier of private-label products with Unox’s established branded portfolio. According to ACM, this could have strengthened Zwanenberg’s negotiating position with supermarkets and allowed it to demand higher prices.

The regulator also found that there were too few alternative suppliers capable of replacing Zwanenberg in the affected categories. It said there were no indications that new suppliers were likely to enter the markets, partly because doing so would require significant investment that could be difficult to recoup.

ACM said it had given Zwanenberg and Unilever opportunities to propose measures that could address its competition concerns.

One potential remedy involved selling part of Zwanenberg’s production capacity to a suitable buyer, creating a new competitor capable of competing with the combined business.

However, ACM concluded that the proposals did not sufficiently address its concerns. It said the proposed buyer would have insufficient production capacity, at least for boiled sausages, while the plans lacked sufficient detail.

The regulator also highlighted a proposed dependency between Zwanenberg and the buyer during the first two years.

“ACM thus has no assurance that the proposals will take away the concerns,” it said, adding that supermarkets had also questioned whether the measures would provide sufficient competition in practice.

As a result, ACM has decided to prohibit the acquisition. Zwanenberg and Unilever can appeal the decision.

The proposed acquisition formed part of Unilever’s wider restructuring of its Foods portfolio, as the company looks to focus on larger brands across cooking aids, mini meals and condiments.

Unilever had agreed to sell its Unox and Zwan meat and soup products to Zwanenberg Food Group through a binding offer. The brands had been part of Unilever for almost a century.

Unilever said the brands had distinct supply chains, sourcing models and technological and R&D requirements that made them less scalable within its broader Foods portfolio.

Unox’s Noodles and Cup-a-Soup products were excluded from the transaction and were set to remain with Unilever because of their closer alignment with the company’s mini meals category. The deal also included soup-in-pouch production at Unilever’s factory in Poznań, Poland.

At the time of the proposed transaction, Heiko Schipper, president of Unilever Foods, said Unox was an “iconic brand” in the Netherlands and that the decision to part with it had not been easy.

Sjoerd van der Laan, CEO of Zwanenberg Food Group, said the Unox and Zwan brands would have been a “wonderful addition” to the company’s portfolio.

The transaction had been subject to closing conditions, regulatory requirements and consultation processes, with the financial terms of the binding offer not disclosed.