Clearance denied for proposed mel'ger of substantial local independent producer of a food product and a…

No. 238. Clearance denied for proposed mel'ger of substantial local independent producer of a food product and a leading national processor and distributor of the same product. In an advisory opinion the Federal Trade Commission denied clearance to a substantial local independent producer of a particular food product to sell its assets or ca:pital stock to a leading national proeessor and distributor of the same product.

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1330 FEDERAL TRADE COMMISeIO::\ DECISIONS The Commissicn noted t hat 11ile. the hvo companies do not noy\ sell their product in each other s markets, they appeal' to be potential competitors of each other. The nntional company appears to rank as fourth largest clistribntor national1y of the product. iu'i' olved, and first in sen' ra 1 cities with very substantial shares of the mnrkets. The local company ranks second among al1 sellers of this food product. in one principn metropolitan market, first there. among the inclependents and has enjoyed a, snbstnntial share of the market for many years. The merger 'yould be. a (geographic) market extension for the. national company. eliminating each as a potential conlpetitor of the other and remo\"ing the local independent from competition. The proposed lnergel' "'ould appeal' to violate Section 7 of the C1nyton Act ~ind cOlFeqnently the Commission must refuse to grant the premerger clearance. requested. (File No. 68;3 7107, released Apr. gO, 1968. No. 2'39. Net weight labeling of mesquite chips. The Commission rendered an ach'isory opinion to n mnnufacturer of me~:CJl1ite chips, a product designed to fta"Ol' fcocl cooked ",ith eharcoill.

In the nch-isory opinion ~ the Commissiondenlt ,yith tv.-o questions. TIll' first question in'i'oh'ed Sec. of the FTC Act and the propriety of such claims in lnheling as ",lwther t1w pl'oduct \\' ill il1lpnrt ;;real 'i"e~tel'n bal'beqne ~' fla'i' or to food and whether it ma~' pl'operl~' be lnl)elec1 ns mesquite chips. Second~ uncleI' SeC'. -1 of the :Fnil' Pncknging and Lnbeling Act, is it propel' to state t 11(' net ,,-eight as ;':\:2 OZ, (:2 LB~. " if the ,vei!2'ht may 'i'ary as 11111eh ns:2 onnces eith~'r "',n- nfter ' c. it is shipped into interstate COll11Jlel'Ce, depending upon the presence ai' ah:::ellces or ll11midity, and the package in fact contains :1~ ounces hen ii- is packec1' Pns~ing upon the first question ~ the Commission said that it had no objection to the proposed claims in the labeling insofar as Sec. 5 of the FTC ~ct is concerned.

,Yith respect to the second qnestion, the Commission ruled that the proposed declnration of net ",eight complies with Sec. ~1 of the Fair PnC'kclg-ing and Labeling Act and comes within the yariations in stated eight permitted under Sec. i.)O(). ~:2 (b) of its regulations. This section permits:

Yal'i;ltilII1S from tl1p stated wpigl1t , , , ,",'hen (' Hll:':P(1 b~' (' ustonwr~' and orc1innl'r (IXIJfhlll'e. aftpr tIlE' (' Oll111lOc1it~' i~ introc1ueec1 into interi::tGte coIl1meree , to e()n(1itiol1~ \yhiel1 no1'lllallr oe-cur ill good distrilmtioll prc1e-tic-e aIH1 \Yl1ic,l1 1111nY()ic1ahJ~' 1'pi::ult in change of \yeight 01' measure, In Hniying at this conclusion, the Commission said that. it has assunwd thnt c...Qood distl'ibution practices ",ill be follO\yed in the marketing of the product ",hich unaYoidabl~' result. in the change of ,,'eight . ,. , .

ADVISORY OPINION DIGEST 1331 in 11 relatively small percentage of cases~ and that an overage IS as ikeJy to OCCllI' as often as a. loss in \\eiQ:ht. The Commission s opinion also ad Yised the requesting party of certain tecllllieal requirements of its regnlations, such as the location of the declaration of net ,yeight, the exact size of the dec.1uration in relation to the area of the principal display panel and other information relating to the identity and location of the manufacturer of the product. (File No. G83Tlll , released ...\..pr. 30, 1968.