Pioneer Foods gets ok to acquire half of Futurelife
A MERGER that sparked fears of a monopoly of sorts within the instant porridge market has been given the green light.
The Competition Tribunal announced yesterday that it gave Pioneer Foods the thumbs-up to acquire 50% of Futurelife Health Products because it is satisfied that the companies will take measures to manage any anti-competitive effects the merger may bring.
“It’s been a lengthy process, but thoroughly well adjudicated by the Competition Tribunal,” Pioneer Foods executive Phil Roux said.
Pioneer Foods owns ProNutro, Spekko and Sasko. Futurelife produces a range of healthy breakfast products and drinks, including powder porridge similar to ProNutro, instant oats products and breakfast bars.
The Competition Commission initially asked the Tribunal to approve the merger without conditions but following a six-day hearing, in which Kellogg South Africa made submissions, the Tribunal approved the merger with conditions. Kellogg SA opposed the merger, arguing that the current competition between ProNutro products and Futurelife’s breakfast offerings in the ready-to-eat porridge market would be diminished.
But the merging parties said that these products were part of a larger breakfast and functional food market. The Tribunal agreed and said the merger may continue as long as Futurelife CEO 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.
Roux said that these conditions were not onerous and that having Saad manage the joint venture was part of the initial plan anyway.
Futurelife could not be reached for comment yesterday afternoon.