Price hike for scampi if firms merge, regulator warns

Whitby Seafoods Limited had been looking to acquire Kilhorne Bay Seafoods

Prices for scampi could rise if a proposed merger between two companies was to go ahead, a regulator has warned.

In May, Whitby Seafoods Ltd announced its intention to buy Kilhorne Bay Seafoods.

The Competition and Markets Authority (CMA) said the deal could result in lower quality products and less competition for scampi suppliers.

Whitby Seafoods said the firm "strongly" rejected the suggestions.

The business is currently the largest UK supplier of breaded scampi to catering customers with a market share of 90%.

The CMA said the company's acquisition of the second largest supplier, Northern Ireland-based Kilhorne Bay Seafoods, would mean even less competition from other scampi suppliers.

Colin Raftery, senior director of mergers at the CMA, said this could worsen economic pressures for eateries.

He said: "Kilhorne Bay is a relatively small player, but Whitby Seafoods already faces only very limited competition when competing for [catering] customers - so the deal would leave customers facing the risk of higher prices and lower quality products."

Whitby Seafoods said it was "bewildered" by the claims product quality could suffer

A Whitby Seafoods spokesperson said the company was "bewildered by, and strongly rejects" those suggestions.

They told the BBC: "Whitby Seafoods has for 37 years been a quality-led, family-owned business, famous for Whitby scampi.

"Our brand and reputation are built on our commitment to quality."

Both companies will now consider a number of other options for their businesses, the spokesperson added.

The CMA said it would refer the deal for a phase-two investigation.

Kilhorne Bay Seafoods has been approached for comment.