The ACCC has decided to oppose the proposed acquisition of Jewel Fine Foods (Jewel) by B&J City Kitchen.
B&J City Kitchen and Jewel (in administration) are the two largest manufacturers of chilled ready meals in Australia. Chilled ready meals are pre-cooked complete meals, which require little preparation by consumers before consumption and are sold through grocery retailers, petrol stations, convenience stores and food service operators, such as airlines.
“We believe that the proposed acquisition is likely to substantially lessen competition for the supply of chilled ready meals,” ACCC Chair Rod Sims said.
“B&J City Kitchen and Jewel are the main chilled ready meal manufacturers that currently meet major retailers’ requirements in terms of scale, range, quality and price. Rival manufacturers have not supplied the same volumes as B&J City Kitchen and Jewel.”
“This proposed acquisition would combine the two major players in this market, concentrating most of the manufacturing capacity of chilled ready meals in one business,” Mr Sims said.
“In contrast, if the proposed acquisition does not proceed, an alternative purchaser is likely to buy Jewel and compete strongly with B&J City Kitchen.”
The ACCC started a review of this transaction on 29 July. B&J City Kitchen had not initially sought clearance from the ACCC for the acquisition.
“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,” Mr Sims said.
“Administrators also have a responsibility to ensure that a potential buyer notifies the ACCC at the earliest opportunity in those circumstances.”
“Not seeking clearance from the ACCC risks court action from the ACCC seeking injunctions to prevent completion of the transaction, as well as divestment and penalties.”
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.
“We found that chilled ready meals are differentiated from other convenience meals on the basis of price, quality, production processes, and occasions for consumption. We consider that alternative convenience meals, such as frozen meals, do not compete closely with chilled ready meals,” Mr Sims said.
Because Jewel is in administration, the ACCC conducted a truncated public review of the proposed acquisition during the past five weeks. The ACCC consulted many industry participants during this public review.
B&J City Kitchen manufactures private label and branded chilled fresh, chilled post-pack pasteurised, and frozen ready meals, from its facility located in Arndell Park, in Western Sydney.
B&J City Kitchen is 77 per cent owned by Beak and Johnston Holdings Pty Ltd and 23 per cent owned by Woolworths Group Ltd. B&J City Kitchen supplies nationally to grocery retailers including Woolworths, Coles, Metcash and Harris Farm.
Jewel also manufactures private-label and branded chilled, frozen, and ambient ready meals, as well as soups, breads and fried snacks from its facilities in Banksmeadow in New South Wales.
It supplies nationally to grocery retailers including Coles, Woolworths, Aldi, Costco and Metcash. Jewel entered administration on 26 April 2019.
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