Australian Health & Nutrition Association Limited (Sanitarium) - Nestlé Australia Limited

Summary

Australian Health & Nutrition Association Limited, trading as Sanitarium (Sanitarium) proposes to acquire the Vita Brits branding, intellectual property and goodwill from Nestlé Australia Limited (Nestlé) (the Proposed Acquisition).

Sanitarium manufactures and supplies Weet-Bix, a wheat biscuit breakfast cereal brand. Sanitarium currently manufactures Vita Brits for Nestlé pursuant to a toll manufacturing agreement.

Nestlé Australia Limited is a wholly owned subsidiary of the Swiss-based, global food and beverages company, Nestlé S.A. Vita Brits is part of Nestlé’s Uncle Tobys brand and is a physically similar, rectangular wheat biscuit product to Weet-Bix, made from 99% wholegrain wheat.

The parties overlap in the national wholesale supply of wheat biscuit cereal products.

Market definition

The ACCC considered the effect of the proposed acquisition on competition in the market(s) for:

• The supply of wheat biscuit cereals,
• The supply of ready-to-eat breakfast cereals, and
• The supply of other breakfast cereals.

It was not necessary for the ACCC to form a concluded view on the precise scope of these markets.

Competition analysis

The ACCC concluded that the proposed acquisition was not likely to substantially lessen competition in any relevant market.

The ACCC found that although Weet-Bix and Vita Brits are similar, consumers do not typically switch between the two products. Accordingly, Vita Brits is unlikely to have been a strong competitive constraint on Weet-Bix in the absence of the proposed acquisition.

The ACCC also considered closely the viability of the Vita Brits product without the acquisition, following Nestlé's loss of Vita Brits manufacturing capability.