FTC Closes Case In Nestle/Alpo Acquisition: Action Means Fort Dodge Plant Will Not Have To Be Sold

The Federal Trade Commission announced today that, based onevidence not available at the time it reached a settlementagreement with Nestle Food Company -- under which Nestle wouldhave been required to divest an Iowa cat food plant -- the Com-mission has closed its investigation and will nullify theagreement.

The Commission had announced the settlement for publiccomment in December 1994, seeking comments from people familiarwith the industry and the plant in question. At that time, theCommission was concerned that Nestle's acquisition of AlpoPetFoods could substantially reduce competition in the U.S.market for canned cat food.

In announcing the closing of the case, the Commission saidthat, since December, it had received new evidence casting sub-stantial doubt on the evidentiary basis underlying its allegationthat the transaction would violate antitrust laws. "The newevidence relates to the definition of the relevant productmarket, market concentration, and entry conditions," theCommission said.
FTC Bureau of Competition Director William J. Baer said thisis "an example of the value of the comment period on Commissionsettlements," adding that while it is highly unusual that theCommission is alerted to new evidence after a settlement isreached, "the Commission considers such evidence very seriouslyand, where relevant, it can dramatically affect the conclusion ofa case."

Nestle is based in Glendale, California and Alpo, asubsidiary of Grand Metropolitan Incorporated, is based inAllentown, Pennsylvania.

The Commission vote to close the matter was 4-1, withCommissioner Roscoe B. Starek, III, dissenting. In a statement,Starek said he is not persuaded that the "new evidence"undermines the Commission's original finding of a Section 7violation. For example, he said, new evidence that the market isrelatively unconcentrated was "demonstrably incomplete," and iscontradicted by "relatively rigorous and comprehensive marketconcentration analysis...." Starek concluded by stating: "Atworst, the record casts considerable doubt only on the efficacyof the proposed remedy. ...I believe that the correct reactionis not to abandon the case, but rather to consider alternative oradditional steps to ensure that the new entrant succeeds."

Copies of Commission documents associated with this matterare available from the FTC's Public Reference Branch, Room 130,6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

 

Statement of the Federal Trade Commission

in the matter of Nestle Food Company

(File No. 941 0124)

 

Since accepting the consent agreement for public comment inDecember 1994, the Commission has received new evidence castingsubstantial doubt on the evidentiary basis supporting the deter-mination that there is reason to believe that the transactionviolated Section 7 of the Clayton Act. The new evidence relatesto the definition of the relevant product market, market concen-tration, and entry conditions. After considering the new evi-dence, the Commission has decided to reject the consent agreementand close the investigation.

(FTC File No. 941 0124)