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Six consumer groups opposed to Switzerland-based Nestl� SA’s acquisition of St. Louis, Mo.-based Ralston Purina Co. said July 25 they do not expect to be able to halt the $10.3 billion deal. Instead, they plan to apply their experience gleaned in fighting the transaction to challenge other food company mergers. Speaking at a press conference in Washington, activists said the deal raises novel antitrust issues, such as the role of so-called category captains that help manage supermarket aisles and the power a shrinking pool of buyers could have on the sellers of a commodity product, such as the meat and poultry meal used to make pet food. Yet they said a lack of hard data, insufficient regulatory agency knowledge of the supply chain and a late start in raising objections suggests the Federal Trade Commission will end up approving the deal. “It is unfortunate,” said Leroy Watson, director of legislative affairs for the National Grange, a political advocacy organization that addresses rural and agricultural issues. “A more timely presentation of this data may have been more effective.” He added, however, that the fight will continue. “These issues are going to come up again and again,” he said. Arthur S. Jaeger, assistant director of the Consumer Federation of America, said the antitrust agencies should be more aggressive about the competitive threats of food deals. “Regardless of the outcome of this merger, CFG encourages the FTC to more thoroughly investigate the role of category captains in food retailing,” he said. Despite the uphill fight, the groups reiterated their preference for the FTC to stop the deal. “I know that this is not something the FTC likes to have said to it, but sometimes big is just bad,” said Don Rounds of the Consumer Alliance. Activists at all six groups said they did not believe the sale of Ralston Purina’s Meow Mix product and some other pet food brands should be sufficient to save the deal from an antitrust veto. “Divestiture of one or two brands — the typical solution for troublesome mergers — will not be enough if the merged company becomes the dominant category captain in pet foods,” Jaeger said. That’s because category captains could use their control over shelf space in the pet-food aisle to stifle entry by new pet-food companies and to limit the effectiveness of store brands, said Albert Foer, president of the American Antitrust Institute. The groups also raised more traditional antitrust arguments to food industry mergers. Pet-food prices historically are higher in markets with fewer competitors, they said, pointing to the dry-cat-food market, where concentration is about 40 percent higher than that in the market for dry dog food. They noted that dry-cat-food prices are 75 percent higher than dry-dog-food prices even though per-pound production costs are similar. Also on the panel were officials from the National Consumers League and the Organization for Competitive Markets. Copyright (c)2001 TDD, LLC. All rights reserved.

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