[Federal Register Volume 65, Number 250 (Thursday, December 28, 2000)]
[Notices]
[Pages 82378-82380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33197]
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FEDERAL TRADE COMMISSION
[File No. 001 0215; Docket No. C-3987]
Philip Morris Companies, Inc., and Nabisco Holdings Corp.;
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public comment describes both the allegations in the draft
complaint that accompanies the consent agreement and the terms of the
consent order--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before January 8, 2001.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Richard Parker or Joseph Brownman,
FTC/H-374, 600 Pennsylvania Avenue, NW., Washington DC 20580. (202)
326-2574 or (202) 326-2605.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of
the Commission's Rules of Practice (16 CFR
[[Page 82379]]
2.34), notice is hereby given that the above-captioned consent
agreement containing a consent order to cease and desist, having been
filed with and accepted, subject to final approval, by the Commission,
has been placed on the public record for a period of thirty (30) days.
The following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for December 7, 2000), on the World Wide Web,
at ``http://www.ftc.gov/os/2000/12/index.htm.'' A paper copy can be
obtained from the FTC Public Reference Room, Room H-130, 600
Pennsylvania Avenue, NW., Washington, DC 20580, either in person or by
calling (202) 326-3627.
Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580. Two paper copies of each comment should be filed,
and should be accompanied, if possible, by a 3\1/2\ inch diskette
containing an electronic copy of the comment. Such comments or views
will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR
4.9(b)(6)(ii)).
Analysis To Aid Public Comment on the Provisionally Accepted
Consent Order
I. Introduction
The Federal Trade Commission (``Commission'') has accepted for
public comment from Philip Morris Companies, Inc. (``Philip Morris'')
and Nabisco Holdings Corp. (``Nabisco) an Agreement Containing Consent
Orders (``Proposed Consent Order). Philip Morris and Nabisco
(``Proposed Respondents) have also reviewed a Draft Complaint that the
Commission contemplates issuing. The Commission and the Proposed
Respondents have also agreed to an Order to Maintain Assets that
requires the Proposed Respondents to maintain the competitive viability
of certain assets pending divestiture. The Proposed Consent Order will
remedy the likely anticompetitive effects in five relevant product
markets arising from the proposed acquisition by Philip Morris of
Nabisco.
II. Parties and Transaction
Proposed Respondent Philip Morris is a Virginia corporation with
its headquarters and principal place of business at 120 Park Avenue,
New York, New York 10017-5592. In 1999, Philip Morris had total
worldwide sales of approximately $79 billion, and total United States
sales of approximately $48 billion. Philip Morris, through its Kraft
Foods Inc. subsidiary, is the nation's largest food and beverage
company.
Proposed Respondent Nabisco is a Delaware corporation with its
headquarters and principal place of business located at 7 Campus Drive,
Parsippany, New Jersey 07054-0311. In 1999, Nabisco had total worldwide
sales of approximately $8.3 billion, and total United States sales of
approximately $5.9 billion. Nabisco is the nation's seventh largest
food and beverage company.
On June 25, 2000, Philip Morris and Nabisco entered into an
agreement for Philip Morris to acquire Nabisco. The value of the
transaction is approximately $19.4 billion.
III. Proposed Complaint
According to the Draft Complaint that the Commission intends to
issue, Philip Morris, through its Kraft Foods subsidiary, and Nabisco
compete in the United States to sell and distribute (a) dry-mix
gelatin, (b) dry-mix pudding, (c) no-bake desserts, (d) baking powder,
and (e) intense mints.
The Commission is concerned that the proposed acquisition would
eliminate substantial competition between Philip Morris and Nabisco,
and increase concentration substantially, in each relevant market, and
result in higher prices. The Commission stated it has reason to believe
that the proposed acquisition would have anticompetitive effects and
violate Section 7 of the Clayton Act and Section 5 of the Federal Trade
Commission Act.
IV. Competitive Concerns
A. Dry-Mix Gelatin Market
Total United States sales of all dry-mix gelatin dessert products
are about $212 million. In this market, Philip Morris, through its
Jell-O brand, is the largest competitor with about an 86% share, and
Nabisco, through its Royal brand, has about a 6% share. After the
acquisition, Philip Morris will control approximately 92% of all dry-
mix gelatin sales. The proposed acquisition will increase the
Herfindahl-Hirschman Index (``HHI''), the customary measure of industry
concentration, in the dry-mix gelatin market by more than 1000 points,
and result in a market concentration of over 8400 points.
B. Dry-Mix Pudding Market
Total United States sales of all dry-mix pudding dessert products
are about $202 million. In this market, Philip Morris, through its
Jell-O brand, is the largest competitor with about an 82% share, and
Nabisco, through its Royal and My-T-Fine brands, has about a 9% share.
After the acquisition, Philip Morris will control approximately 91% of
all dry-mix pudding sales. The proposed acquisition will increase the
HHI by more than 1400 points and result in a market concentration of
over 8300 points.
C. No-Bake Desserts Market
Total United States sales of all no-bake dessert products are about
$56 million. In this market, Philip Morris, through its Jell-O brand,
is the largest competitor with about a 90% share, and Nabisco, through
its Royal brand, has about a 6% share. After the acquisition, Philip
Morris will control approximately 96% of all no-bake dessert sales. The
proposed acquisition will increase the HHI by more than 1000 points,
and result in a market concentration of over 9200 points.
D. Baking Powder Market
Total United States sales of all baking powder products are about
$29 million. In this market, Philip Morris, through its Calumet brand,
has about a 27% share, and Nabisco, with its Davis and Fleischmann's
brands, has about a 17% share. After the acquisition, Philip Morris
will control approximately 44% of all United States baking powder
sales. The proposed acquisition will increase the HHI by more than 900
points and result in market concentration of more than 4800 points.
E. Intense Mints Market
Total United States sales of all intense mints products are about
$250 million. In this market, Philip Morris, through its Altoids brand,
has about a 60% share, and Nabisco, with its Ice Breakers and Cool
Blast brands, has about a 15% share. After the acquisition, Philip
Morris will control approximately 75% of all United States intense
mints sales. The proposed acquisition would increase the HHI by
approximately 1800 points and result in market concentration of more
than 5800 points.
V. The Consent Order
The Proposed Consent Order, if finally issued by the Commission,
would settle all of the charges alleged in the Commission's Draft
Complaint. Under the terms of the Proposed Consent Order, Philip Morris
and Nabisco will be required to divest the
[[Page 82380]]
Nabisco dry-mix desserts and baking powder businesses to The Jel Sert
Company and the intense mints business, together with related Ice
Breakers gum and Breath Savers mint businesses, to Hershey Foods
Corporation.
Philip Morris and Nabisco will be required to complete the required
divestitures within ten (10) business days from the date they
consummate their proposed acquisition. In the event Philip Morris and
Nabisco do not complete the required divestitures in the time allowed,
procedures for the appointment of a trustee to sell the assets have
been agreed to and will be triggered. The Proposed Consent Order
empowers the trustee to sell such additional ancillary assets as may be
necessary to assure the marketability, viability, and competitiveness
of the businesses that are required to be divested.
Accompanying the Proposed Consent Order is an Order to Maintain
Assets. This order requires Philip Morris and Nabisco to preserve and
maintain the competitive viability of all of the assets required to be
divested in order to insure that the competitive value of these assets
will be maintained after the merger but before the assets are actually
divested.
VI. Opportunity for Public Comment
This Proposed Consent Order has been placed on the public record
for thirty (30) days for receipt of comments from interested persons.
Comments received during this period will become part of the public
record. After the thirty (30) days, the Commission will again review
the Proposed Consent Order and the comments received, and will decide
whether it should withdraw from the agreement or make final the Consent
Order in the agreement.
By accepting the Proposed Consent Order subject to final approval,
the Commission anticipates that the competitive problems alleged in the
Draft Complaint will be resolved. The purpose of this analysis is to
invite and facilitate public comment concerning the Proposed Consent
order. It is not intended to constitute an official interpretation of
the Proposed Consent Order, nor is it intended to modify the terms of
the orders in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-33197 Filed 12-27-00; 8:45 am]
BILLING CODE 6750-01-M