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ACCC opposes ready meals merger

frozen food from the freezer in the female hand, Woman placing container with frozen ready meals in refrigerator

Consumer watchdog ACCC has opposed the acquisition of Jewel Fine Foods (Jewel) by B&J City Kitchen.

The two companies are the largest manufacturers of chilled ready-to-eat meals in the country, and the ACCC believes a merger would “substantially lessen competition” in the market.

“We believe that the proposed acquisition is likely to substantially lessen competition for the supply of chilled ready meals. B&J City Kitchen and Jewel are the main chilled ready meal manufacturers that currently meet major retailers’ requirements in terms of scale, range, quality and price. Rival manufacturers have not supplied the same volumes as B&J City Kitchen and Jewel,” ACCC chair Rod Sims said.

“This proposed acquisition would combine the two major players in this market, concentrating most of the manufacturing capacity of chilled ready meals in one business. In contrast, if the proposed acquisition does not proceed, an alternative purchaser is likely to buy Jewel and compete strongly with B&J City Kitchen.”

The ACCC said that B&J City Kitchen, which sells chilled ready meals under the food brands Pitango, Beak & Sons and Tasty Pot, did not get a clearance from them for the acquisition. Woolworths Group has 23 per cent investment in the business.

“We’re surprised by the decision as this is a highly competitive and fast- moving market,” said Ray Hanly, group CEO of Beak & Johnston, to Inside FMCG.

“It is critical that company executives understand that attempting to sell businesses or assets to a competitor, particularly a close competitor, is likely to attract the attention of the ACCC. Administrators also have a responsibility to ensure that a potential buyer notifies the ACCC at the earliest opportunity in those circumstances. Not seeking clearance from the ACCC risks court action from the ACCC seeking injunctions to prevent completion of the transaction, as well as divestment and penalties,” added Sims.

Jewel sells food products under food brands including Quick as Wok, Spice & Passion and Jewel of India.

Peter Gothard, Jewel Fine Foods administration, told AAP that the business is “a strong player in the chilled ready meal market and there remain a number of parties interested in acquiring the business”.

The ACCC said it will closely monitor companies producing convenience meals from frozen ready meals to takeaway foods.

“We found that chilled ready meals are differentiated from other convenience meals on the basis of price, quality, production processes, and occasions for consumption. We consider that alternative convenience meals, such as frozen meals, do not compete closely with chilled ready meals,” Sims said.

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