UK watchdog targets packet mixes and sauces, not mustard, in McCormick's Unilever deal

The UK Competition and Markets Authority (CMA) found on Wednesday, November 11, that McCormick's (NYSE: MKC) planned combination with Unilever's foods business raises competition concerns in packet cooking mixes and sauces, and gave the companies until November 18 to offer remedies, according to its case page.

Without an acceptable offer, the deal goes to an in-depth phase 2 investigation, the regulator said. Unilever (LSE: ULVR) had said a week earlier that it expects the combination to complete by mid-2027 at the latest, as FinanceInTime reported.

Schwartz meets Knorr on the supermarket shelf

The concerns sit in two narrow UK markets: dry ingredient mixes, such as a chilli con carne mix, and dry pour-over sauces, such as parsley sauce, sold to retailers, according to the CMA's summary of its phase 1 decision.

McCormick sells mixes and sauces in Britain under the Schwartz brand, and Unilever sells food under the Knorr, Maille and Colman's brands, the summary said. The CMA said the merger "will combine the two largest branded suppliers and the Merged Entity will be the largest supplier of dry ingredient mixes and dry sauces by far."

Rivals such as Maggi in mixes and Bisto in sauces, and supermarkets' own-label products, "impose only a limited constraint on the Parties," the authority found. It added that entry is difficult "due to limited shelf space in supermarkets and the well-established position of existing suppliers."

The mustard question the companies had already tried to settle

The CMA found no competition problem in mustard. It said McCormick sells American-style mustard under French's, while Unilever sells English-style Colman's and French-style Maille, and that supermarket evidence showed shoppers "typically do not consider English, French and American style mustards to be suitable alternatives to one another."

Mustard was where the companies had moved first. In August, a Unilever spokesperson said the company had decided "to market the Colman's brand and assets to potential buyers in order to proactively seek to address potential competition concerns from the planned combination," FoodNavigator reported. The CMA's summary does not mention a sale of Colman's.

No public response from McCormick or Unilever to the CMA's finding was available at the time of writing.

A deal built to hand Unilever's shareholders control

McCormick agreed on March 31, 2026, to combine with the Unilever foods business in a Reverse Morris Trust, a structure designed to be generally tax-free for Unilever's shareholders, according to McCormick's quarterly report for the period ended August 31. Current Unilever shareholders are expected to own about 55.1% of the combined company, McCormick's current shareholders about 35.0%, and Unilever up to about 9.9%, the filing shows. Unilever is also due a one-time $15.7 billion cash payment, subject to adjustments.

McCormick may owe Unilever a $420 million termination fee, or expense reimbursement of up to $75 million, if the agreement ends in specified circumstances, the filing says. McCormick recorded $171.2 million of special charges related to the pending transaction in the nine months to August 31.

Unilever has said the combination is expected to complete "by mid-2027 at the latest," according to its Investor Event announcement of November 3.

A remedy sized to two shelves should not move the timetable much

We think the finding is narrow enough to be a cost of the deal rather than a threat to it. The overlap the CMA describes sits in UK packet mixes and sauces, a small corner of a deal that includes a $15.7 billion cash payment to Unilever, and the regulator cleared mustard, the area the companies had treated as the main risk.

The threat is timing and price: a phase 2 referral would add months to a deal that Unilever expects to close by mid-2027, and a divestment of Schwartz or Knorr lines in Britain would cut into the scale McCormick is paying for. The opportunity is a quick undertaking by November 18 that removes the last open UK question. We would watch what the companies offer and whether the CMA accepts it, and our view would change if the CMA refers the deal despite an offer, which would signal that it sees the problem as larger than two product lines.

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