Heinz Canada Signs Undertaking Regarding Jarred Baby Food And Infant Cereal

Backgrounder

August 01, 2000

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Highlights of the inquiry

The Competition Bureau was concerned with Heinz Canada's contractual and selling practices with grocery and drug retailers in Canada. In the Bureau's view, these practices created or induced exclusive supply and tying arrangements for jarred baby food and infant cereal in grocery and drug stores in Canada. The main anti-competitive practices of concern to the Bureau included:

• Large, lump sum, up front payments made to retailers not to stock non-Heinz Canada jarred baby food and infant cereal.
• Multi-year contracts for exclusive supply, discounts conditional upon exclusive supply, and the tied selling of infant cereal and jarred baby food and other products together.

The Competition Bureau was concerned that the combination of all of these practices created a significant additional barrier to entry for competitors that resulted in a substantial lessening of competition.

The Undertaking agreed upon by Heinz covers both commercially prepared baby food and infant cereal. The first part of the Undertaking defines these and other terms.

In light of the Bureau's concerns, Heinz Canada has voluntarily agreed to stop these marketing practices. In order to ensure that customers are aware of the Undertaking, the company will deliver copies of it to all of its direct customers. Heinz Canada will also provide copies of its wholesalers and retailers' supply agreements to the Competition Bureau upon request. Heinz also agreed to resolve any non-compliance issues through voluntary arbitration, or by a consent order of the Competition Tribunal.

The Bureau views the elimination of:

• private, contractual barriers to competition,
• exclusivity requirements, and
• the tying of the price of jarred baby food and infant cereal to other products

as a necessary condition for competition in this market.

The Bureau views the resolution of this matter positively. The timely changes to Heinz Canada' marketing practices have ensured that the competition concerns which prompted the Bureau's inquiry have been resolved.

News Release 

Enforceable Undertaking (PDF; 475 KB; 12 Pages ) 
(Download Adobe Acrobat Reader)

Other interventions

This settlement is one of several actions the Competition Bureau has dealt with in regards to competition and jarred baby food in Canada in recent years. The Bureau participated in hearings held by the Canadian International Trade Tribunal (CITT) as part of its inquiry to determine whether dumping of jarred baby food had caused material injury to Heinz Canada's domestic production of jarred baby food and whether it was in the public interest to impose import duties. The Bureau also participated in the subsequent NAFTA Bi-National Panel Review which started in June 1998. Additional information on these interventions may be obtained in the 1998-1999 Annual Report and in the Commissioner of Competition's September 30, 1999 speech delivered before the Canadian Bar Association annual meeting, both available on the Bureau's website.

For more information, please call:

Madeleine Dussault
(819) 953-4351

Julie Hébert
(819) 953-4257