JM Smucker's Wesson Oil acquisition terminated after FTC challenge
08 Mar 2018 --- The JM Smucker Company has announced that the company and Conagra Brands have agreed to terminate the definitive agreement to acquire the Wesson oil brand from Conagra Brands.
The US Federal Trade Commission said on Monday that it had filed an administrative complaint charging that J.M. Smucker's proposed purchase of Conagra's Wesson cooking oil brand would likely lessen competition and violate anti-trust law.
Smucker owns the Crisco brand. If it acquired the Wesson brand, it would control at least 70 percent of the market for branded canola and vegetable oils sold to grocery stores and other retailers, the FTC said in a statement.
"The complaint alleges that the acquisition is likely to increase Smucker's negotiating leverage against retailers, especially traditional grocers, by eliminating the vigorous head-to-head competition that exists between the Crisco and Wesson brands today," the statement said.
In response to the announcement, Mark Smucker, Chief Executive Officer at JM Smucker said: “While we disagree with the FTC's conclusion, we have mutually determined with Conagra that it is not in the best interest of either party to expend the anticipated significant additional time and resources to challenge the FTC's administrative complaint.”
“We believe the FTC underestimated the significant role that private label brands play in the oils category, which accounts for approximately 50 percent of all cooking oil sales and holds significantly higher market share at some retailers. This transaction was expected to provide significant cost synergies to ensure that branded oil products would remain competitive in the market. We continue to be committed to delivering value to our consumers and customers with our Crisco brand and oils business,” he added.
FoodIngredientsFirst has reached out to JM Smucker for further comments.
