Nestlé takeover facing scrutiny by US trade authorities

Nestlé deal under investigation Keystone

Nestlé's planned acquisition of United States pet food group, Ralston Purina, is coming under the scrutiny of antitrust enforcers at the US Federal Trade Commission (FTC).

The FTC is seeking more information about the deal, which would make Nestlé the world’s biggest pet food company, and is seeking to extend the deadline by which the purchase must be approved.

The takeover would enable Nestlé to add such household names as Ralston’s Dog and Cat Chow to its range of Friskies cat food and Mighty Dog brands.

Keith Schopp, a spokesman for St Louis-based Ralston Purina, said the request “was typical for transactions of this nature [and] the parties still expect to close [the deal] before December 31.”

Swiss-based Nestlé, the world’s largest food group, first announced its intention to buy Ralston Purina on January 16 in a $10 billion (SFr16.54 billion) deal.

Fears have been expressed that Nestlé could use its considerable leverage with supermarket chains to bid up the “slotting” fees that manufacturers pay for space on store shelves.

The takeover could also raise antitrust concerns in the US because the combined companies would control nearly 70 per cent of the dry cat food market.

So far the FTC has failed to express concerns over slotting fees. In a report released in February the agency said there was not enough research to determine whether slotting fees are becoming a problem.

Once Nestlé and Ralston have submitted all the required information, the FTC has 30 days to decide whether to oppose the merger, unless the companies agree to voluntarily extend the deadline.

swissinfo with agencies