The OFT has referred Kerry Foods Limited’s (Kerry Foods) completed acquisition of the frozen ready meals business of Headland Food Limited (Headland) to the Competition Commission (CC) for detailed investigation. Kerry Foods acquired Headland in January 2011, however subsequent increases in the price of frozen ready meals have caused concern. During the OFT’s investigation, the merged group argued that the price rises were due to the increase in the cost of raw materials and that, without the merger, Headland, who had suffered from inconsistent financial performance, would have had to exit the market. The OFT accepted that there had been increases in the cost of raw materials which, in part, justified the price increases but this alone did not allay concerns. Nor did the OFT accept Headland's ‘failing firm’ defence. Although Headland’s financial performance had been consistently poor, the OFT did not find sufficient evidence that it would have inevitably exited the market. The OFT is concerned that Kerry Foods and Headland are, by far, the largest producers of frozen ready meals in the UK and that refrigerated ready meals do not act as a sufficient competitive constraint on the sales of frozen ready meals. Consequently, the OFT has asked the CC to conduct an in-depth investigation.