Quebec vegetable packer Nortera has run afoul of Canada’s Competition Bureau in its bid to acquire two major brands.
The Competition Bureau announced Aug. 19 it will ask Canada’s Competition Tribunal to block Nortera Foods’ plan to buy Green Giant and Le Sieur. The two canned and frozen vegetable businesses are currently owned by the Canadian arm of New Jersey-based B&G Foods.
The two companies announced the proposed deal last October.
WHY IT MATTERS: The eventual ownership of these two major retail brands could affect Canadian vegetable growers’ contracts in the future.
“Our investigation found that this proposed transaction would weaken competition and likely lead to higher prices and fewer choices for staple items at the grocery store,” Jeanne Pratt, Canada’s interim commissioner of competition, said in a news release. “We are taking action to preserve competition so that Canadians don’t pay more for basic necessities like canned and frozen vegetables.”
Proposed deal would worsen concentration: bureau
Nortera has been the packer for the B&G-owned brands in Canada for about 30 years. However, the bureau says the proposed deal would mean one company controls “a large share of supply in a market that is already highly concentrated.”
Nortera also processes, markets and sells canned and frozen vegetables in Canada under the Del Monte and Arctic Gardens brands and packs private-label products for retail chains. Despite the two companies’ current arrangement, B&G competes with Nortera to supply grocery retailers and is the largest of its competitors in that market, the bureau said.
Loss of competition between Nortera and B&G “could weaken the ability of retailers to negotiate lower prices and better terms, ” the bureau said. “In turn, these higher costs may be passed on to consumers at the grocery store, who may also face reduced choice.”
Domestic and foreign alternative suppliers “are unlikely to provide sufficient competitive pressure to offset the loss of competition following the transaction,” the bureau said. “Some smaller retailers, in particular, rely heavily on branded products and may have fewer alternatives.”
It’s unlikely that new competitors would emerge quickly enough to counteract the effects of the purchase, the bureau added. New companies face high barriers to entry in facility investments and access to vegetables.
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