The ACCC will not oppose Australian Health & Nutrition Association Limited’s (Sanitarium) proposed acquisition of the brand and intellectual property assets necessary for the supply of Vita Brits from Société des Produits Nestlé S.A. and Nestlé Australia Ltd (together, Nestlé).
Sanitarium manufactures and supplies Weet-Bix and also manufactures private label wheat biscuit cereals. Nestlé (under the Uncle Tobys brand) supplies Vita Brits, a competing wheat biscuit cereal product, but currently Vita Brits are manufactured by Sanitarium.
The proposed acquisition involves Vita Brits branding, intellectual property and goodwill. It does not include the Uncle Tobys branding or any manufacturing assets.
The ACCC’s review focused on how closely Weet-Bix and Vita Brits compete in the wholesale supply of wheat biscuit cereal and the future of the Vita Brits product should it not be acquired by Sanitarium.
The ACCC’s analysis of data to assess whether consumers would switch between Weet-Bix and Vita Brits products in response to price changes indicated that, although the products are similar in nature, Vita Brits is unlikely to be a strong competitive constraint on Weet-Bix in the absence of the proposed acquisition.
“We tested the closeness of competition between the Weet-Bix and Vita Brits products and found that consumers do not typically switch between the two. This finding was consistent with the feedback we received from market inquiries. We found that the proposed acquisition would not be likely to substantially lessen competition,” ACCC Commissioner Dr. Philip Williams said.
The ACCC also considered closely the viability of the Vita Brits product without the acquisition, following Nestlé’s loss of Vita Brits manufacturing capability.
More information on this review is available at .
Note
In considering the proposed acquisition, the ACCC applies the legal test set out in section 50 of the Competition and Consumer Act.
In general terms, section 50 prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in any market.
Background
Australian Health & Nutrition Association Limited, trading as Sanitarium is an Australian registered not-for-profit organisation wholly owned by the Seventh-day Adventist Church.
Weet-Bix is the leading wheat biscuit brand in Australia, made from 97 per cent wholegrain wheat, and the Weet-Bix range includes several product and flavour varieties.
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 per cent wholegrain wheat. Sanitarium currently manufactures Vita Brits for Nestlé pursuant to a toll manufacturing agreement, which means they do so for a fee.
