Heinz

1. Gerber: 65 percent market share
Beech-Nut: 15.4 percent market share   This industry is concentrated.

  2. Both make lump-sum payments called “fixed trade spending” or “slotting fees” or “pay-to-stay” arrangements to grocery stores to obtain shelf placement. “Variable trade spending” which typically consists of manufacturers’ discounts and allowances to supermarkets to create retail price differentials that entice the consumer to purchase their product instead of a competitor’s. Price against each other and that where both are present in the same areas.

  3. Barriers to entry. Finally, the anticompetitive effect of the merger is further enhanced by high barriers to market entry. Barriers to entry are important in evaluating whether market concentration statistics accurately reflect the pre- and likely post- merger competitive picture. If entry barriers are low, the threat of outside entry can significantly alter the anticompetitive effects of the merger by deterring the remaining entities from colluding or exercising market power. Low barriers to entry enable a potential competitor to deter anticompetitive behavior by firms within the market simply by its ability to enter the market. Existing firms know that if they collude or exercise market power to charge supra-competitive prices, entry by firms currently not competing in the market becomes likely, thereby increasing the pressure on them to act competitively. In this case, there had been no significant entries in the baby food market in decades and new entry was "difficult and improbable." This finding seems to eliminate the possibility that the reduced competition caused by the merger will be ameliorated by new competition from outsiders. [continues]

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