FOOD processor Heinz has made a bid to acquire Raffertys Garden.The Australian Competition and Consumer Commission last week released a Statement of Issues on Heinz's proposal, detailing concerns that the merge would negatively affect competition.
ACCC chairman Rod Sims said the ACCCs preliminary view was that the proposed acquisition would result in the combination of the two largest suppliers of wet and dry infant food in Australia and would remove Rafferty's Garden as one of Heinz's closest and most vigorous and effective competitors.
"The ACCC is therefore investigating whether the removal of Rafferty's Garden as a competitor would be likely to substantially lessen competition, paying particular attention to the height of barriers to entry or expansion and the degree of supermarket countervailing power,'' Mr Sims said.
Mr Sims said Rafferty's Garden accounted for 32 per cent of the wet baby food market and Heinz accounted for 46 per cent.
"This is clearly a case of the top two players getting together,'' he said.
"We have very strong concerns at this stage.
Mr Sims said the regulatory body had started publically discussing the matter in late October last year.
"The supermarkets are so powerful, which makes it harder to break into the market, and they will not always ensure a range of products, especially smaller ones.''
Rafferty's Garden managing director Michael Tinkler said if the takeover was approved, it would give the brand the opportunity to expand internationally.
Mr Tinkler said he did not believe a takeover would disadvantage other brands, given seven brands had entered the market since the time Rafferty's Garden hit the market in October 2007.
"I think it works the other way and if we get together then it is more likely the market will try to develop new brands.''
Heinz is preparing to make a submission to the ACCC.
Coles and Woolworths declined to comment on the matter.
The ACCC is seeking comments from Heinz, Rafferty's Garden and competitors and will be taking submissions until February 28.
Submissions can be sent by email to the ACCC at email@example.com