The Australian Competition and Consumer Commission will not intervene in the proposed acquisition of The Smiths Snackfood Company Limited by Frito-Lay Australia.
This follows the finalisation of the sale of Snack Brands Australia to Dollar Sweets Holdings.
Snack Brands Australia is a package of brands, manufacturing facilities and staff from the former Smiths' and Frito-Lay businesses which is to be divested simultaneously with the proposed acquisition.
Snack Brands Australia will market several Australian 'icon' brands, such as CC's, Cheezels, Thins and Samboy Potato chips as well as other brands.
The ACCC's primary concern was that the divested Snack Brands Australia business would become and remain a vigorous and effective competitor for Frito-Lay in Australia and that there would be no substantial lessening of competition. The divestiture was also the subject of a court enforceable undertaking accepted by the ACCC.
The ACCC had earlier formed a view that, without a simultaneous divestiture, the acquisition would breach section 50 of the Trade Practices Act 1974, which prohibits acquisitions which have the effect of substantially lessening competition in a market.
The ACCC was, however, satisfied that the creation of Snack Brands Australia will ensure that the acquisition will not result in a substantial lessening of competition in any market.
'The ACCC believes that the sale to Dollar Sweets will result in a continuation of the vigorous competition that has occurred in the market,' ACCC Chairman, Professor Allan Fels, said today.
In November 1997 Frito-Lay Australia, advised the ACCC that its parent, PepsiCo Inc., intended to buy from United Biscuits a number of businesses around the world. These included The Smiths Snackfood Company, the manufacturer of several Australian icon salty snack food brands such as CC's, Twisties, Cheezels and Smiths Original Potato Chips.
The effect of the acquisition was that the second largest Australian producer of salty snack foods, Frito-Lay Australia would acquire the largest Australian producer of salty snack foods, The Smiths Snackfood Company.
Frito-Lay informed the ACCC that, in order that the acquisition would not result in a substantial lessening of competition in any market, it would agree to divest a package of brands. This package was to include brands as well as manufacturing facilities, including plants in South Australia, New South Wales and Victoria. The package was to be called Snack Brands Australia.
In mid-June 1998 the ACCC was informed that Frito-Lay's preferred acquirer for Snack Brands Australia was Dollar Sweets Holdings, a manufacturer of food and confectionary products including Players biscuits and Alexanders Chocolates. Also in mid-June 1998, the ACCC became aware that Thorney Holdings, the investment arm of the Pratt group of companies, had purchased a substantial shareholding in Dollar Sweets Holdings.
