Australia opposes Heinz's acquisition of baby food producer Rafferty's Garden
The Australian Competition and Consumer Commission (ACCC) authorities have opposed US-based food gia…The Australian Competition and Consumer Commission (ACCC) authorities have opposed US-based food giant HJ Heinz's proposed acquisition of organic baby food producer Rafferty's Garden.
This decision follows a review of the transaction for more than seven months.
Heinz and Rafferty's Garden are the two leading suppliers of wet and dry infant food in Australia.
According to ACCC, the merged entity would have 80% of the share of sales in the wet infant food market and around 70% in infant cereals and infant snacks market.
ACCC chairman Rod Sims said the Commission concluded that the proposed acquisition is likely to result in a substantial lessening of competition through the removal of Rafferty's Garden, which has around 40% market share in wet infant food and is a close and effective competitor of Heinz, which also has about 40% market share in wet infant food.
"The proposed acquisition would combine the two largest suppliers of wet and dry infant food in Australia, resulting in highly concentrated markets where barriers to entry and expansion are high, particularly because of brand recognition and preference."
"This is likely to reduce the frequency and depth of promotional activity, increase prices and reduce innovation in the wet and dry infant food markets," Sims added.
The ACCC evaluated the dependence of both the companies on the major supermarket chains for stocking their products.
Heinz supplies a range of wet infant food in cans, glass jars and pouch/pouch-and-spout packaging, while Rafferty's Garden is a producer of wet infant food in pouch/pouch-and-spout packaging. Both companies supply dry infant products, including cereals, snacks and teething rusks.
