ACCC looks to Heinz’s Australian baby food market shake-up

Posted by AFN Staff Writers on 14th February 2013

The Australian Competition and Consumer Commission (ACCC) has raised concern over Heinz’s proposed acquisition of fellow wet and dry infant food company, Rafferty’s Garden.

The Australian baby food sector is currently dominated by Heinz at 39 per cent volume of the market. Rafferty’s Garden makes up 16 per cent of the Australian baby food market, taking Heinz’s potential share to 55 per cent if the acquisition is approved.

ACCC Chairman Rod Sims said that combining two large Australian baby food brands would be likely to limit competition in the market.

“The ACCC’s preliminary view is that the proposed acquisition would remove Rafferty’s Garden as one of Heinz’s closest and most vigorous and effective competitors in the wet and dry infant food markets,” Mr Sims said.

“The ACCC is therefore investigating whether the removal of Rafferty’s Garden as a competitor would be likely to substantially lessen competition, paying particular attention to the height of barriers to entry or expansion and the degree of supermarket countervailing power,” Mr Sims added.

The ACCC has invited further submissions from the infant food market in response to the acquisition by 28 February 2013.

The ACCC’s final decision will be deferred until 21 March 2013.

In late 2012, the ACCC also called for submissions on Nestle’s acquisition of Pfizer Nutrition’s infant formula business in Australia. Nestlé and Pfizer Nutrition are two of the three largest suppliers of infant formula and toddler milk in Australia. Nestlé supplies infant formula and toddler milk in Australia under the brands NAN and Lactogen. Pfizer Nutrition supplies infant formula and toddler milk under the brands S-26 and SMA.

The ACCC decided not to oppose the acquisition of Pfizer Nutrition by Nestle.