CMA flags Northern Ireland concerns in ABF-Hovis merger

UK- The UK Competition and Markets Authority (CMA) has provisionally flagged competition concerns linked to Associated British Foods’ planned merger with Hovis Group, but only in the Northern Ireland market.

In an interim report issued this week, the regulator said it has found no substantive issues in Great Britain, where it concluded that Allied Bakeries, the ABF unit behind brands such as Kingsmill, would otherwise exit the bread and bakery‑products market if the deal does not go through.

The acquisition deal was announced in August 2025, aiming to merge Hovis with ABF’s Allied Bakeries division to create a more resilient and profitable UK bread business amid shifting consumer preferences.

In that scenario, the CMA said, competition would still be reduced in Britain, so the merger would not worsen the existing landscape on the mainland.

However, the watchdog has raised distinct alarms for Northern Ireland, where it provisionally sees the combined ABF-Hovis entity potentially gaining a dominant share of the bread and certain other bakery product supply.

The regulator has observed persistent downward pressure on the sector, driven by shifting consumer preferences away from traditional wrapped bread, alongside rising energy, wheat and distribution costs, and margin compression from private-label demand.

The inquiry group found that Allied Bakeries has been making losses for more than a decade, with ABF funding sustained deficits amid restructuring efforts.

The CMA’s report suggests that, unlike in Great Britain, there may be credible alternative buyers or arrangements that could preserve competition in Northern Ireland without enabling the full merger as currently structured.

To address these concerns, ABF has already begun a sales process for its bakery operations in Northern Ireland and is working with remedies that could involve divesting or restructuring that regional business.

Responding to the Competition and Market Authority’s interim report into the anticipated acquisition by Associated British Foods plc of Hovis Group Limited, a spokesperson for ABF said:

“The CMA’s Interim Report is welcome recognition that, against a challenging financial backdrop for the wrapped and sliced bread sector, this transaction will help to deliver a far more effective competitor that will be able to invest in innovation and growth, to the benefit of consumers and the wider UK economy.”

“We have been clear with the CMA that the transaction is the only route to creating a sustainably profitable business. The CMA has recognised that, if the transaction is not allowed to proceed, Allied Bakeries will be unable to continue operating under current market conditions. We will continue to engage constructively with the CMA, including with regard to our Northern Ireland business, so that we can achieve regulatory clearance as efficiently as possible.”

ABF and Hovis are now working with the CMA on potential remedies. ABF has already initiated a sales process for its Northern Ireland bakery business as part of efforts to address regulatory concerns.

The CMA has invited both parties to submit formal remedy proposals within 14 days, which will then be subject to public consultation. A final ruling on the transaction is expected by 24 June 2026.

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