Australia’s competition watchdog has moved to block the acquisition of organic baby food manufacturer Rafferty’s Garden by US food giant Heinz. The Australian Competition and Consumer Commission said today (6 June) that its investigation into the proposed merger would significantly reduce competition in the market for wet and dry baby 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,” said Rod Sims, ACCC chairman. According to the ACCC, the merged entity would have accounted for around 80% of wet infant food and 70% of infant cereal and snacks. The proposal was therefore “likely to reduce the frequency and depth of promotional activity, increase prices and reduce innovation in the wet and dry infant food markets,” Sims suggested. Responding to the news, a spokesperson for Heinz told just-food that the company was considering its options, which could potentially include an appeal against the decision. “Both Heinz and Rafferty’s Garden are disappointed by the Commission’s decision and are currently considering their options,” the spokesperson said. In late October 2012, private equity firm Anacacia Capital had agreed to sell Rafferty’s Garden to H J Heinz, for an undisclosed sum.
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