American food companies JM Smucker and Conagra Brands have decided to drop their deal over the sale of the Wesson edible oil brand to JM Smucker due to regulatory difficulties.
The companies said on 6 March that they were calling off their US$285M deal – agreed on in May 2017 – as a result of the US Federal Trade Commission (FTC) filing an administrative complaint against it, reported just-food.
In its complaint, the FTC claimed the sale of the Wesson brand would “likely” reduce competition in the US branded canola and vegetable oil market.
JM Smucker CEO Mark Smucker said the firms disagreed with the FTC conclusion but had mutually decided to terminate the acquisition instead of expending “signification additional time and resources” to challenge the complaint.
“We believe the FTC underestimated the significant role that private-label brands play in the oils category, which account for approximately 50% of all cooking oil sales and hold significantly higher market share at some retailers,” Smucker said.
Conagra said it intended to continue its evaluation of the role of the Wesson oil brand within its portfolio, despite the FTC complaint.
Deputy director of the Bureau of Competition at FTC said JM Smucker and Conagra abandoning the deal was “good news for consumers” as they would be able to “continue to reap the benefits of vigorous competition in the market for branded canola and vegetable oils”.