JM Smucker and Conagra Brands have terminated their agreement regarding the sale of Conagra’s Wesson oil business to Smucker after competition concerns from US authorities.
The announcement follows a decision made days before by the US Federal Trade Commission (FTC) which challenged the deal as it “is likely to substantially lessen competition” in the US for canola and vegetable oils.
Smucker currently owns the Crisco brand of oils and by acquiring Wesson, the FTC said the company would control “least 70% of the market for branded canola and vegetable oils sold to grocery stores and other retailers”.
Under the planned acquisition, which was announced in May last year, Smucker would have obtained all intellectual property rights to the Wesson brand, as well as inventory and manufacturing equipment.
The complaint alleged that the acquisition would have increased Smucker’s negotiating leverage against retailers, especially traditional grocers, by eliminating the head-to-head competition that exists between the Crisco and Wesson brands today.
The FTC claimed that retailers, and ultimately consumers, “would likely face higher prices for branded canola and vegetable cooking oil”.
Consequently both companies have abandoned the deal.
JM Smucker CEO Mark 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 account for approximately 50% of all cooking oil sales and hold 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.”
Speaking earlier in the week, Ian Conner, deputy director of the Bureau of Competition, said: “Cooks across the US benefit from the competition between the staple brands Wesson and Crisco. We are taking this action to preserve the benefits of that competition.
“After attempted price increases by each brand over the last two years were limited by intense competition from the other, this transaction eliminates that restraint and would allow Smucker to raise prices on both brands.”
A spokesperson from Conagra Brands added: “While we are disappointed by and disagree with the commission’s decision, we have determined that it is in the best interest of our shareholders, customers and employees to terminate the agreement to sell the Wesson oil business to The JM Smucker Company rather than pursue litigation.”
Currently chief executive of GreenV – an international group of companies active in the horticultural sector – van Karnebeek spent a large portion of his career at Heineken, working in commercial, marketing and general management positions. He served as chief commercial officer at the Dutch brewer from 2015 until 2021.
The facility combines the existing Kerry office in Barcelona with a new customer suite and application labs. It will enable the company to work more closely with its customers in Southern Europe to develop food and beverage solutions.
The sweet and culinary flavor creation labs are the latest addition to the company’s expansive campus that has been in operation since 1964, spanning more than 312,150 square feet in Brabrand, Denmark. The innovation hub is home to more than 400 employees engaged in research, application development, ingredient and flavor creation.