The CMA has signalled it is prepared to accept remedies offered by Greencore and Bakkavor to address competition concerns over their proposed merger.

A Phase 1 probe found the tie-up risked reducing competition in the supply of own-label chilled sauces to major supermarkets, potentially pushing up prices or lowering quality.

Both companies, which merger would create one of the UK’s largest convenience food suppliers, supply retailers including Tesco, M&S, Sainsbury’s, Waitrose and Asda.

To resolve the concerns, the businesses have agreed to sell Greencore’s only chilled sauce and soups plant in Bristol.

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The CMA said the divestment appears capable of addressing the issues identified and will now consult on the final make-up of the remedy package and the suitability of any purchaser.

CMA executive director of mergers Joel Bamford said the watchdog must ensure supermarket pricing remains competitive, adding that the deal as originally proposed could have led to increased costs for shoppers.

He said the remedies had been accepted in principle following “close engagement” with both parties.

“The cost of our weekly shop matters to us all, so we must take decisions that ensure there is effective competition helping to keep product prices as low as possible on supermarket shelves,” said Bamford.

“Our assessment found Greencore’s deal to buy Bakkavor could raise prices at the till.”

The regulator said other product categories reviewed during the investigation, including Italian chilled ready meals and salads, were not found to raise significant concerns.