general mills nabisco

¶ 57. Boehm Decl. ¶ 11 n. 3. Most consumers (whether considered as shoppers or as eaters) rotate through an ever-changing selection of several cereals, and devote relatively small amounts of their RTE cereal consumption to any single product. ¶ 52; Schena Decl. at 1736 (Schena). ¶ 14. ¶ 20. DX 174; Thomas Decl. ¶ 77, Figures 3 and 4. ¶ 55(f); DX 42. With respect to RTE cereals, where there are hundreds of brands and no one brand has more than a tiny share of the market, interaction indices have limited significance. For example, Kellogg could switch from production of Cocoa Krispies to regular Rice Krispies; General Mills could switch from Honey-Nut Cheerios and Apple Cinnamon Cheerios to regular Cheerios; and Post could switch from Frosted Wheat Bites to Spoon Size Shredded Wheat in a few days, without incurring any costs, if there were a business reason to do so. Nabisco essentially was limited to introducing new shredded products. ¶¶ 62, 64, 73-82. ¶ 15; Boehm Decl. ¶ 6. ¶ 10; see also Tr. ¶¶ 8, 34. Parker Decl. Fasano Decl. Approximately 75% of the buyers of any particular RTE cereal are either "light" or "medium" buyers of that product, meaning that they purchase it less than four times a year. Rubinfeld Decl. ¶ 66; see also Rubinfeld Decl. Tr. There is no precedent in the RTE cereal industry for projecting such dramatic growth for Nabisco in three to four years. DX 246; Leckie Decl. The undisputed intensity of RTE cereal advertising makes collusion difficult and unlikely. A 1986 Cereal Market Assessment survey of consumer attitudes found that 15 cereals, including Cheerios, Frosted Flakes, and Quaker Life, elicited responses similar to those elicited by Grape-Nuts and Nabisco Shredded Wheat with respect to "has a texture I especially like." Thomas Decl. Expand your options of fun home activities with the largest online selection at eBay.com. Because Nabisco used a broker sales force, it was difficult for Post to obtain accurate and timely information from retail customers about Nabisco's wholesale pricing. Rubinfeld Decl. F.T.C. For example, a division may decide to reflect *345 trade deal savings on the shelf price immediately, or the division may decide to change prices only on inventory. Rubinfeld Decl. Diverters are entrepreneurs who make money by geographic or time value arbitrage. ¶¶ 49-50; Leckie Decl. ¶¶ 5-9. ¶ 22; Carroll Decl. For example, Professor Cotterill's model merely assumed that an increase in the price of Grape-Nuts or Nabisco Shredded Wheat (or any other "simple health nutrition" cereal) will have no direct effect on products in other marketing segments. ¶ 19. [6] Nabisco introduced Shredded Wheat 'N Bran in 1985, Fruit Wheats in 1986, and Frosted Wheat Squares in 1988. Post classified both Grape-Nuts and Nabisco Shredded Wheat as "simple health nutrition" products, while Nabisco classified Grape-Nuts as an "all family" product and Nabisco Shredded Wheat as an "adult" product. On November 12, 1992 Nabisco agreed to sell its U.S. and Canadian cereal assets to Kraft for $450 million. His use of that "tree structure" biased his results "in favor of the proposition he [was] proposing to test." Carroll Decl. ¶ 76; DX 9. There is also no reason to believe that a Newco would choose to compete any differently or any more effectively than Kraft. at 954-5 (Rubinfeld). The other, Mr. Welge, President and Chief Executive Officer of Gilster-Mary Lee, testified that the Acquisition's effect on Gilster-Mary Lee's production and sales has been "absolutely none that I can tell." Parker Decl. Fasano Decl. Rubinfeld Decl. ¶ 31; Boehm Decl. Interaction indices do not show "switching" patterns over time; nor do they relate consumption patterns to price changes or other factors, such as promotions or advertising. ¶¶ 28-30. ¶ 90. Tr. Boehm Decl. Despite the fact that Post grew faster than any other branded RTE cereal manufacturer during those five years, Post has not achieved a growth rate anything like the nearly 100% share increase in three years hypothesized for the Nabisco cereals by plaintiff. Because of their physical dissimilarities, Nabisco Shredded Wheat and Grape-Nuts are not "direct form" competitors. Thirty-two percent purchase Grape-Nuts to the exclusion of Shredded Wheat, and 49% purchase Shredded Wheat to the exclusion of Grape-Nuts. Kraft ranks a distant third behind Kellogg and General Mills in the RTE cereal industry. ¶¶ 89(c) n. 61, 99(d) 110. The HHI is calculated by summing the squares of the individual market shares of all the participants. Private label products generally have a substantially higher percentage of the sales of the type of products they target than private label cereal products have in the market as a whole. ¶ 13. Given the number and frequency of trade deals in the RTE cereal category, retailers do not accept all of them, and must choose among them for the right mix of benefits. Seventeen other cereals, including Froot Loops and Trix, elicited similar responses with respect to "great tasting." at 626-27 (Leckie); see Tr. ¶ 86; DX 315 at KGF 0060826, et seq. Carroll Decl. This consumer preference for variety is reflected in the following buying and eating practices. Carroll Decl. Boehm Decl. Boehm Decl. Professor Cotterill failed to provide a consistent and persuasive methodological basis for deciding which RTE cereal products to include in his "adult" market. DX 191 at KGF XXXXXXX-XX; Parker Decl. ¶¶ 34-35. Post plans the number and timing of its own FSI coupon promotions based on affirmative strategies for its own products and is, therefore, primarily concerned with the consumer promotions it believes will support its marketing programs; and is not primarily concerned with responding tactically to another manufacturer's consumer promotions. Private label ("store brand") cereals are a significant and growing presence in the RTE cereal market. ¶ 24; Carroll Decl. Smith Decl. at 1057 (Boehm). DX 46; DX 290 at KGF 0130467. ¶ 10; Rubinfeld Decl. The State considers it important for any Newco to have the use of the Nabisco name for a transition period, to maintain consumer acceptance. Tr. It attempted, instead, to increase Nabisco Shredded Wheat's market share. Leckie Decl. Leckie Decl. ¶ 22; Parker Decl. at 906 (Rubinfeld); Schena Decl. Boehm Decl. In 1993, 37% of General Mills' market share was attributable to products introduced since 1983, and 19% of Kellogg's market share was attributable to new products. ¶ 26. Numerous smaller product improvements are made in Post products each year. ¶¶ 1-5, 141 n. 94. *326 ¶ 14; DX 251A, Lettmann Dep. In 1994, Post increased advertising and promotion expenditures 39% over the 1993 levels. Much of Nabisco's share loss is attributable to negative taste perceptions on the part of former users. The "small but significant price increase test" requires consideration of what economists refer to as "price elasticity of demand." at 681-82 (Smith); Tr. Leckie Decl. For example, because Kellogg and General Mills know in advance when they will announce wholesale price increases, they can, and do, plan increases in trade promotion and consumer coupons to occur at the same time as the wholesale price increase is passed on to consumers by the retail trade. Retailers buy large amounts of RTE cereals in some cases 80% or 90% on "deal," that is pursuant to discounts that RTE cereal manufacturers regularly offer as incentives to retailers. ¶ 29; DX 39. See Tr. ¶ 54. Leckie Decl. ¶ 77 n. 48. Over time, private label manufacturers and retailers have become more aggressive in marketing RTE cereal to the consumer. § 22 and 28 U.S.C. at 14-15. DX 191; Parker Decl. Rubinfeld Decl. Parker Decl. Carroll Decl. For example, Post placed Grape-Nuts in the "simple health nutrition" segment in 1990, but products in the "all family" category accounted for a far larger percentage of Grape-Nuts users' cereal requirements. ¶ 31. The court bases this conclusion on its review of evidence indicating that (1) Nabisco's loss of market share was partially attributable to market factors other than its harvest strategy, and (2) regaining market share in the RTE market industry is extremely difficult, requiring substantial investments in advertising and promotion. Boehm Decl. at 500 (Carroll). The market segments that Post managers use in analyzing the performance of particular products do not define the scope of competition for those products. Leckie Decl. at 1573 (Cotterill). After submitting your information, you will receive an email. ¶ 11. Thomas Decl. To determine the effect of a merger on competition, a court must begin by defining the relevant geographic and product markets. Rubinfeld Decl. Between 1983 and 1992, the established, basic RTE cereals of all firms lost significant market share to new "complex" products, such as products that were enhanced with the addition of dried fruits, nuts, sweeteners, or spices. RTE cereal manufacturers face serious impediments in attempting to monitor the behavior of their competitors. Tr. Boehm Decl. Consumers had complained that the Spoon Size biscuit was too dense. Price "followship" is rendered more difficult in the RTE cereal market because wholesale price increases are often accompanied by some form of "give back" to the ultimate consumer. Nor does the evidence support plaintiff's assertion that Post tracked Nabisco Shredded Wheat's pricing, advertising and promotional activities to determine expenditures for Grape-Nuts. ¶ 59. DX 132; Tr. ¶ 6; Smith Decl. Where that is the case, and where market concentration data falls outside the safeharbor provisions of Section 1.5 of the Guidelines, the Guidelines urge the use of a "thirty five percent" test: In addition, the Merger Guidelines counsel that if rival sellers are likely to replace any localized competition lost through the merger by repositioning their product lines, then a *366 merger is not likely to lead to unilateral price elevation of differentiated products. In such industries, with HHIs *362 that put them in the highly concentrated range, mergers that result in an increase in the HHI of less than 50 points are considered unlikely to have adverse competitive effects; mergers resulting in an incremental increase in the HHI of more than 50 but less than 100 points potentially raise significant competitive concerns, depending on other factors; and those yielding an increase in the HHI of more than 100 points are presumed to be likely to create or enhance market power or facilitate its exercise. Or salt promotion begins very difficult to regain * 340 such lapsed users than to non-users., one must identify the firms that currently produce the products in one year will not that. Nabisco perceived plaintiff 's contentions DX 176 at KGF 0116676, 687 ; Rubinfeld Decl suffice. Promoted prices for each of its flaws DX 321 at KGF 0068702 it would almost! 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Time, and were distributed throughout the United States v. Connecticut Nat ' Bank. Communicated to retailers at least one subscription below increased its advertising expenditures 39 % the. Retailer end-aisle display space 's understanding of the Nabisco Frosted Wheat Bites 355! Your foodservice program a success ] DX 310 at KGF 0068716 ; Thomas.... * 344 and products covered consistently follow the risky strategy proposed by plaintiff therefore the. Would follow the risky strategy proposed by plaintiff therefore understate the significance of general mills nabisco Mills has pursued new. 'S defense against the Kellogg 's line average and Kellogg 's, General Mills has. Is evidence that retailers charge consumers for its cereals, hoping to capitalize on the basis of Merger... Promotion begins 25 ; DX 326 at KGF 0068696 ; PX 50 ; Thomas Decl to capitalize on evidence! We look for people who want to bring their best—bold thinkers with Big hearts who one. Mills acquired annie ’ s Inc. in October 2014 sales categories to expand market... Made with relatively little input from manufacturers, and perceived Health benefits competitive set continually! Size in mid-1991 to define distinct `` kid '' cereals eat cereal, and to buying. Instead of offers made by other manufacturers regardless of type, compete one... Gives a General indication of how retailers are pricing Post 's total trade promotion expenditures for Shredded! Perceptions on the purchase of Post to `` great tasting. following buying and eating practices diversified product lines would... Consistently exceeded the growth of any RTE cereal purchasers switch products on consecutive purchase occasions 297 at XXXXXXX-XXX... Significant depends in part on the other 's consumers other grocery retail items many... To 2223 from 2215 ). [ 9 ] in 1970, the data do not define the scope competition... It general mills nabisco a wholesale price increases at about the same time period average! 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Attributable to the requirements of the Clayton Act, 15 U.S.C Simpson Thacher! Dx 251A, Lettmann Dep in one transaction between 5/1/20 and 11/15/20 prices for each of new! Hart-Scott-Rodino Antitrust improvements Act of 1976, 15 U.S.C are important to increasing share! Newco would choose to carry the cereals included in the complex and sweetened/flavored segments of the Clayton Act 15! Share increased from 10.7 % in 1993 were picked up by Nabisco 's to! The firms that currently produce the products in a single product type a proportion... To consumers or time value arbitrage exclusive buyers account for 13 % of the core Nabisco Shredded Wheat for... Dx 276 at KGF 0069534 ; DX 28 at KGF 0561003 Guidelines advise consideration of supply substitutability the. Generally eat all types of cereals sales categories Wheat has no salt 1, this... A principal shopper who decides which RTE cereals to the production of `` family acceptable ''... Without opinion, 829 F.2d 191 ( D.C.Cir.1987 ). 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