In February we reported on the ACCC’s concerns with the proposed acquisition by Heinz of local infant food producer Rafferty’s Garden, which would see the merger of the top two suppliers, resulting in a market share of around 78% of wet baby food and 70% of dry baby food.
In its press release on 6 June 2013 opposing the acquisition, the ACCC noted its conclusion that the removal of Rafferty’s Garden as a competitor would substantially lessen competition in a market that is already highly concentrated with high barriers to entry and expansion. As Chairman Rod Sims stated, the ACCC was not satisfied that the major supermarket chains would have sufficient power to either constrain prices or drive further innovation in the market, both of which were more likely to if competition remained between the two brands.
As King & Wood Mallesons partner Wayne Leach told GCR (subscription only), “It will be interesting how the ACCC reconciles this finding with its current public investigation of the major supermarkets and their alleged unconscionable conduct and misuses of market power in dealings with suppliers and private label products.”
A public competition assessment, which will set out the ACCC’s reasons for opposing the acquisition, will be made available in due course, and is certain to be of interest not only to other potential acquirers of Rafferty’s but also to suppliers to supermarket majors more generally.