Frosty reception from ACCC for chilled ready meal deal

Frosty reception from ACCC for chilled ready meal deal

The Australian Competition and Consumer Commission (ACCC) has opposed the proposed acquisition of Jewel Fine Foods (Jewel) by B&J City Kitchen, two Australian manufacturers of chilled ready meals.

“We believe that the proposed acquisition is likely to substantially lessen competition for the supply of chilled ready meals,” said ACCC Chair Rod Sims.

Chilled ready meals are pre-cooked complete meals that require little preparation by consumers before consumption and are sold through grocery retailers, petrol stations, convenience stores and foodservice operators, such as airlines.

B&J City Kitchen and Jewel manufacture a significant supply of chilled ready meals to meet retailers’ requirements in terms of scale, range, quality and price. Rival manufacturers are unable to supply the same volumes of products as B&J City Kitchen and Jewel.

The acquisition of Jewel by B&J City Kitchen would combine two of the largest players in the market, concentrating the manufacturing capacity of chilled ready meals in one business. However, if the acquisition does not proceed, there is a strong likelihood of Jewel being purchased by an alternative manufacturer, thereby competing strongly with B&J City Kitchen.

The ACCC began a review of the transaction on 29 July, after B&J City Kitchen failed to seek clearance from the ACCC for the acquisition. Businesses that do not seek clearance from the ACCC risk inciting court action, divestment and penalties from the ACCC, seeking to prevent any transactions.

“It is critical that company executives understand that attempting to sell businesses or assets to a competitor, particularly a close competitor, is likely to attract the attention of the ACCC. Administrators also have a responsibility to ensure that a potential buyer notifies the ACCC at the earliest opportunity in those circumstances,” Sims said.

The ACCC also considered how closely producers of other types of convenience meals, such as frozen ready meals or takeaway foods, compete with chilled ready meals. Through this, the ACCC discovered that chilled ready meals differ from other convenience meals on the basis of price, quality, production processes and occasions for consumption. Consequently, alternative convenience meals, such as frozen meals, do not compete with chilled ready meals.

As Jewel is in administration, the ACCC has conducted a truncated public review of the proposed acquisition over the past five weeks, after consulting many industry participants.

Image credit: © Hera

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