Commission clears Heinz-Wattie to acquire Eta businesses
Published08 Jul 1998
The Commerce Commission yesterday cleared Heinz-Wattie Limited to acquire the salad dressing business of Eta Foods, a division of Griffins Foods Limited, a license of the "Eta" trade mark and brand and ownership of the "Praise" trade mark and brand.
Commission Chairman Peter Allport said that the Commission was satisfied that, should the acquisition go ahead, Heinz-Wattie would not acquire or strengthen a dominant position in any market.
The relevant markets in this case are those for the manufacture and distribution of:
· peanut butter in New Zealand;
· tomato-based and other sauces in New Zealand; and
· salad dressings in New Zealand.
The Commission concluded that dominance concerns would not arise in the peanut butter market because Heinz-Wattie has only a small involvement in that market. In the markets for tomato-based and other sauces, the "HP" and "Lea & Perrins" brands distributed by Eta have small market shares and again, the combined market power would not pose dominance concerns.
In the salad dressings market the combined entity would have a market share higher than the "safe harbours" published in Commission's Business Acquisitions Guidelines. The safe harbours are:
· no more than 40 percent market share; or
· no more than 60 percent market share if at least one competitor has 15 percent or more of the market.
However, the Commission was satisfied that the combination of existing competition, the buying power of quick serve restaurants, there being no significant barriers to importing salad dressings, the increasing market share held by supermarket house brands, and the potential for new entry and expansion to the market, would prevent the combined entity acquiring or strengthening a dominant position in this market.
Background
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets.
Parties can apply for clearance, which will be granted if the Commission is satisfied that dominance is not acquired or strengthened.
Clearance, if granted, protects an acquisition from legal challenge under the Act.
