UK MPs slam Kraft and urge further scrutiny

Posted by Josette Dunn on 7th April 2010

cadbury-cropped.pngUK politicians are demanding Kraft Foods’ future undertakings on Cadbury are monitored closely after criticising the way the US food giant handled its takeover of the UK chocolate maker.

In a report published yesterday (6 April), MPs said Kraft acted both “irresponsibly and unwisely” after suggesting it could keep open Cadbury’s Somerdale facility when it first went public with its interest in the business last autumn.

After securing the acquisition of Cadbury, Kraft then admitted it would have to push ahead with the UK confectioner’s plans to close the site – prompting fury from unions and a House of Commons inquiry.

Last month, Kraft faced a committee of MPs to discuss its takeover of Cadbury and its decision to close the Somerdale factory.

The US food giant apologised to the committee for pledging to keep the plant open but the subsequent committee report concluded the firm acted both “irresponsibly and unwisely” in its handling of the Somerdale factory.

The report claimed Kraft’s conduct had “damaged its UK reputation and soured its relationship with Cadbury employees”.

Peter Luff, chairman of the committee, said the controversy surrounding the Kraft takeover of Cadbury has rightly opened a debate on how takeovers in the UK are conducted.

“That debate must continue, as a matter of urgency, in the next Parliament and I fully expect the next Business, Innovation and Skills Committee to play a key role in any future reform,” Luff said.

The report also set out a number of undertakings given by Kraft to the committee in respect of the future of Cadbury, which calls on the Government to monitor for compliance.

Kraft said it will continue to manage Cadbury from within the UK and continue to produce Dairy Milk in the UK, that there will be no further compulsory redundancies amongst manufacturing employees and no additional plant closures in the UK for the next two years.

The committee also called on the Government to invite Kraft to clarify its intentions on the guarantee of the future of Cadbury factories at Chirk near Wrexham, and Marlbrook in Herefordshire, and its commitment to the current level of employment in Reading and Bournville.

Luff said Kraft will have to deliver, “in full”, on these undertakings if it is to repair the damage caused to its reputation by the “woeful handling” of the closure of the Somerdale factory.

“Given the lack of trust in Kraft at the moment it is vital that the Department for Business, Innovation and Skills keeps a very close eye on Kraft’s compliance with its undertakings,” Luff added.

Meanwhile, Unite the union representing Cadbury workers, has urged Kraft chief executive Irene Rosenfeld to meet Cadbury workers face-to-face.

“Kraft should heed the voice of parliament to meet Cadbury workers face-to-face. Irene Rosenfeld must now come to the birthplace of Cadbury, Bournville in Birmingham,” said Unite deputy general secretary, Jack Dromey.

The union also repeated calls for a “Cadbury law” banning hostile takeovers of successful UK companies by overseas multinationals.

“Never again should the short-term interests of shareholders and the hedge-fund boys in red braces making a quick buck come before the long-term interests of household-name British companies and the thousands of jobs and families these companies support,” Dromey added.

just-food is the world’s leading portal for the global pre-packaged food and retail industries. Its daily mix of breaking news, views, analysis and research serves over 100,000 food executives each month.