Federal investigators looking into PepsiCo‘s proposed acquisition of Quaker Oats are concerned that Pepsi products may dominate retail shelf space in the cold bottled-drink distribution channel in convenience stores and other outlets.
The US Federal Trade Commission (FTC) last week requested more information from the companies regarding the US$14.5bn deal. While the FTC is unlikely to veto the acquisition, PepsiCo could be forced to sell off an overlapping product line or impose other restrictions as a condition of approval. Analysts believe that Pepsi might be forced to sell its third-ranked All-Sport drink, which competes with Quaker’s Gatorade.
Opponents of the deal argue that the Gatorade brand would increase Pepsi’s considerable clout with retailers and give it more power to dictate pricing or other sales terms. The Quaker deal will consolidate PepsiCo’s position in the beverage and snackfood market. The company also owns Frito-Lay, Tropicana, and last month closed its acquisition of South Beach Beverage (SoBe), a maker of edgy “new-age” drinks, despite protests from independent bottlers and distributors to the FTC.