Britain's competition authority announced its concerns on Wednesday that the merger between drinks bottlers Refresco and Cott could lead to higher prices for some supermarket and household brands.
The proposed $1.25bn (£935m) purchase by Netherlands-based Refresco of Canadian rival Cott would involve a number of packaging and distribution businesses in the UK.
The Competition and Markets Authority (CMA) said it was particularly concerned over the production of juice drinks using a special aseptic process that allows preservative-free supply without the need for refrigeration.
Only one other competitor in the UK currently supplies third parties with juice drinks using this production process, the CMA said, adding that it was concerned that following the merger, the combined group would increase prices or lower quality standards.
“We have looked at all aspects of this merger and have concerns that the merger could lead to reduced competition in the manufacturing and packaging of certain juice drinks," said Rachel Merelie, acting executive director of the CMA (left).
She added: "This may result in higher prices or quality standards slipping for stores and brands, with potential knock-on effects to end-consumers.”
The CMA said it would refer the merger for an in-depth investigation unless Refresco could offer acceptable undertakings to address the CMA's competition concerns.
Shares in Refresco were down 0.4% to €19.77 in early trade on the Amsterdam Stock Exchange.