Tuesday, October 25, 2011

U.S. Conditionally Approves Acquisition of Sara Lee Bread Products

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

A proposed acquisition that would combine the largest and third largest bakers and sellers of sliced fresh bread in the United States has been approved by the Department of Justice Antitrust Division, subject to a series of divestitures intended to preserve competition in eight markets.

Grupo Bimbo S.A.B. de C.V., parent company of Bimbo Bakeries USA, can proceed with its acquisition of Sara Lee Corporation’s North American Fresh Bakery business under the terms of a proposed consent decree. The transaction was expected to close on November 5, according to Bimbo Bakeries.

The Justice Department alleged in a complaint filed on October 21 in the federal district court in Washington, D.C. that the transaction, without the divestitures, would have substantially increased concentration in various geographic markets for the sale of fresh bread and eliminate substantial head-to-head competition between Bimbo Bakeries and Sara Lee for sliced fresh bread sold in retail stores.

Specifically, the government alleged anticompetitive effects in eight relevant geographic markets for the sale of sliced bread: Los Angeles, Sacramento, San Diego, and San Francisco in California; Kansas City, Kansas; Omaha, Nebraska; Oklahoma City, Oklahoma; and the Harrisburg/Scranton area in Pennsylvania.

Under the proposed consent decree, which is subject to court approval, the companies must divest the rights to sell Sara Lee’s EarthGrains brand and brands in the Sara Lee family (Sara Lee, Sara Lee Classic, Sara Lee Soft & Smooth, Sara Lee Hearty & Delicious and Sara Lee Delightful) in California; Sara Lee’s EarthGrains brand and Bimbo’s Mrs Baird’s brand in the Kansas City area; Sara Lee’s EarthGrains brand in the Oklahoma City area; Sara Lee’s EarthGrains and Healthy Choice brands in the Omaha area; and Sara Lee’s Holsum and Milano brands in the Harrisburg/Scranton area.

In addition, the parties would be required to divest the associated manufacturing, distribution, and marketing assets necessary to compete effectively in the sale of those brands in those areas. The divestitures are intended to remedy the Justice Department’s antitrust concerns.

The complaint and proposed consent decree in U.S. v. Grupo Bimbo, S.A.B. de C.V., BBU, Inc., and Sara Lee Corp., No. 1:11cv01857, appears here on the Department of Justice Antitrust Division website.

Further details will be reported in CCH Trade Regulation Reporter.

No comments: