A merger that sparked fears of a monopoly of sorts within the instant porridge market has been given the green light.
The Competition Tribunal said on Monday that it had given Pioneer Foods the thumbs up to acquire 50% of FUTURELIFE® as it was satisfied the companies would take measures to manage any anti-competitive effects the merger may bring about.
“It’s been a lengthy process, but thoroughly well adjudicated by the Competition Tribunal,” Pioneer Foods executive Phil Roux said.
Pioneer owns food brands including ProNutro, Spekko, Sasko, Bokomo and Weetbix.
FUTURELIFE®, founded by Paul Saad, brother of Stephen Saad, who founded generic drug maker Aspen, makes breakfast products and drinks, including powder porridges similar to ProNutro, instant oats and breakfast bars.
In April, Pioneer announced its intention to acquire a 50% stake in FUTURELIFE® for an undisclosed amount. Pioneer said the transaction would complement its existing product line as FUTURELIFE® owned SA’s fastest-growing health brands in the functional foods space, where it had a limited presence.
The popularity of this type of food product has experienced rapid global growth, which has coincided with a rise in health-conscious consumption patterns.
Last year, the market was valued at $4.8bn, and is projected to reach $9.07bn by 2020, according to a recent study.
The Competition Commission initially asked the tribunal to approve the merger without conditions, but following a six-day hearing, in which Kellogg SA made submissions, the tribunal approved it with conditions.
Kellogg SA opposed the merger, arguing that the competition between Pioneer’s ProNutro and FUTURELIFE®’s alternatives in the ready-to-eat porridge market would be diminished. But the merging parties said these products were part of a larger breakfast and functional food market.
The tribunal agreed and said the merger may continue as long as Paul Saad manages the process for at least five years and Pioneer Foods maintains investment in the ProNutro brand at its current levels for two years.
It has also told the companies to ensure information is not passed from the joint venture to other competing brands in the Pioneer Foods stable.
Mr Roux said these conditions were not onerous and having Mr Saad manage the joint venture was part of the initial plan anyway.
“(We) will be able to fully express (FUTURELIFE®’s) brand potential through the joint venture, through innovation and joint capabilities,” he said.
FUTURELIFE® could not be reached for comment yesterday afternoon.
By Roxanne Henderson