Heinz’s bid to buy rival HP Foods is in danger of falling at the first hurdle, a leading competition lawyer handling a similar deal has warned.
The Office of Fair Trading referred Heinz’s proposed takeover to the Competition Commission last October. In its decision, it argued that Heinz tomato ketchup imposed a material constraint on the pricing of HP sauce in that if the latter’s price rose beyond a certain level, customers would switch to the former.

Therefore, it said, there was a “realistic prospect that the merged entity will be able to profitably raise the price of brown sauce post-merger, resulting in a substantial lessening of competition”.

Simon Holmes, partner in EU and competition law at SJ Berwin, said the decision had recently been cited in relation to a deal his firm was handling.

He said: “It was sufficient for the OFT not to give us the green light. What they were concerned about was portfolio power and the competitive constraints which products in one market place on products in another.”
The commission is due to deliver its verdict on the Heinz deal in the next few months.





The UK’s second biggest cash and carry operator, Bestway, has joined the Association of Convenience Stores. The ACS said Bestway’s membership added momentum to its political lobbying. The cash and carry has shot up to fourth on The Grocer’s Big 30 list from number six after buying rival Batleys last year for £100m.
Confectionery cash and carry specialist Hancocks has announced 5% growth in sales for 2005. Hancocks recruited 20% more customers, growing its turnover to £64.7m.
Sainsbury has been fined £1,000 for misleading consumers about the status of wines. Enfield branch wrongly claimed the Rosemont Reserve Chardonnay 2002 had won a Decanter World Wine Award. It had already been told by trading standards officers that it was the 2001 vintage that was a silver medal winner.
Chocolate maker Elizabeth Shaw is closing its factory in Bristol, affecting 160 jobs, in the autumn. It said the 105-year-old facilities were outdated and inefficient. Some staff would be transferred within the company, it added.
Northern Foods’ appeal against a High Court ruling that Defra should be allowed to apply for PGI status from the EU for the Melton Mowbray Pork Pie has been declined. A solicitor acting for the Melton Mowbray Pork Pie Association said: “This should encourage other suppliers to protect their foods.”
The Real Good Food Company has revealed that trading performance for the year to December 31, 2005 had been marginally below market expectations. It added that pre-tax profits for the group for 2005 would be about £7m.
Bestway joins ACS
Hancocks up 5%
Sainsbury fined
choc Plant to shut
Appeal declined
Not quite as good

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