Whitby Seafoods has decided against pursuing its acquisition of Kilhorne Bay Seafoods after the UK’s competition watchdog said it would further probe the deal due to concerns over prices.

Earlier this year, Whitby Seafoods announced it planned to acquire Northern Ireland-based Kilhorne Bay through its subsidiary Kilkeel Seafoods, which is also based in the province.

However this month, the Competition and Markets Authority (CMA) referred the deal for a “phase-two investigation”, citing price and quality concerns. It had started to investigate the deal in August.

The Yorkshire-based scampi manufacturer has now backed out of the deal to buy the UK’s second-largest scampi supplier.

A spokesperson for Whitby Seafoods said: “As a Yorkshire-based, family-owned business with a commitment to providing high quality, excellent value breaded scampi to our customers the proposed merger was appealing because our values are highly aligned with Kilhorne, a small family-owned company based in Northern Ireland. Half of Kilhorne’s scampi sales were in Europe and this gave Whitby a unique opportunity to build a new market for our business.

“Sadly the resources required to engage in a CMA phase-two investigation are out of all proportion to any potential benefit from the deal, and we have therefore withdrawn our offer for Kilhorne and will not be proceeding with the acquisition.”

Announcing the phase-two investigation, the watchdog had said Whitby Seafoods would have faced even less competition from other scampi suppliers. The CMA’s investigation said it had found that Whitby Seafoods faces limited competition from potential market entrants and suppliers of other types of breaded seafood.

“The loss of competition brought about by the deal could result in foodservice customers having to pay higher prices – which could ultimately lead to higher prices for customers in venues such as pubs, restaurants, and fish and chip shops – as well as reduced product quality.”