Whitby Seafoods Ltd scraps merger plans after price hike warning

Whitby Seafoods Limited had been looking to acquire Kilhorne Bay Seafoods

A scampi firm has abandoned merger plans after a regulator warned it could lead to a price hike for customers.

Whitby Seafoods Ltd said it would no longer proceed with its proposed acquisition of Kilhorne Bay Seafoods.

It comes after the Competition and Markets Authority (CMA) referred the deal for a "phase-two investigation", citing price and quality concerns.

The firm rejected the suggestions, but said the resources needed to engage in the process were "out of proportion".

Whitby Seafoods is currently the largest UK supplier of breaded scampi to catering customers with a market share of 90%, according to the CMA.

The firm announced its intention to buy the second largest supplier, Northern Ireland-based Kilhorne Bay Seafoods, in May this year.

However, the CMA feared the merger would mean "even less competition" from other scampi suppliers, resulting in higher prices and lower quality for customers - suggestions the firm "strongly" rejected.

The deal was referred for a phase-two investigation, which would have given both parties a chance to address any of the CMA's concerns.

However, on Thursday, Whitby Seafoods notified the competition watchdog that it was abandoning the plans.

A spokesperson for the family-owned business said: "Sadly the resources required to engage in a CMA phase 2 investigation are out of all proportion to any potential benefit from the deal, and we have therefore withdrawn our offer for Kilhorne and will not be proceeding with the acquisition".

Whitby Seafoods said half of Kilhorne's scampi sales had been to Europe which would have presented the firm with a "unique opportunity" to build a new market.