The competition regulator is assessing the impact of the proposed merger between food giants Kraft and H.J. Heinz on Australia’s $90 billion supermarket sector with the planned tie-up to create the world’s fifth-largest food and beverage company and a major source of grocery brands for retailers. The merged business is to be called Kraft Heinz.

However, the deal unveiled yesterday backed by billionaire investor guru Warren Buffett and Brazil’s 3G Capital is unlikely to create a giant grocery supplier in Australia following a food spin-off by Kraft three years ago that created Mondelez International.

Mondelez took on Kraft’s huge portfolio of food brands in the Asia Pacific including Cadbury, Oreo, Kraft Peanut Butter, Ritz, Vegemite and The Natural Confectionary Co. While Mondelez manufactures Kraft brands under licence, it left Kraft with little direct exposure to Australia.

Heinz, whose brands include Heinz Ketchup, baked beans as well as a suite of tinned soups and frozen vegetables, looks to have little crossover with Mondelez in Australia but any merger between well-known suppliers has naturally caught the attention of the Australian Competition and Consumer Commission.

A spokesman for the ACCC said the regulator was considering its view of the proposed mega deal that would create an international food group with revenues of around $US28 billion a year, and would look at the potential impact on competition in the Australian grocery sector. “The ACCC is aware of the transaction. If it decides to conduct a public review, it will be listed on the ACCC’s website,’’ he said.

Globally Mondelez is a $US35bn business with 110,000 employees of which 3500 work in Australia. Its Asia-Pacific operations delivered $US4.6bn in sales last year.

Extracted in full from The Australian.