Heinz Canada signs undertaking regarding jarred baby food and infant cereal

OTTAWA, August 1, 2000 — The Competition Bureau today announced that H.J. Heinz Company of Canada Ltd. has agreed to change some of its business practices regarding jarred baby food and infant cereal in Canada.

Heinz Canada is currently the sole supplier of jarred baby food in Canada, marketing the Earth's Best and Heinz brands, and infant cereal under the Pablum, Heinz and Earth's Best brands.

Following settlement negotiations with the Bureau, Heinz Canada has voluntarily signed a binding undertaking designed to enhance the competitive climate for jarred baby food and infant cereal in Canada.

The Bureau had concerns regarding Heinz Canada's marketing and selling practices which allowed for exclusive supply arrangements for jarred baby food and infant cereal. The principal anti-competitive practices uncovered by the investigation 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, and discounts conditional upon exclusive supply. Based on these factors, the Bureau concluded that a major and dominant supplier had engaged in activities which created a significant additional barrier to entry for competitors, preventing or lessening competition substantially in the marketplace.

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

"Jarred baby food and infant cereal are practical necessities for many of today's families with children," said André Lafond, Deputy Commissioner of Competition.  "The undertaking is designed to open the market to competition for existing or new suppliers. Competition will in turn ensure caregivers of babies the benefits of choice."

In the undertaking, Heinz Canada has agreed to:

• not enforce the exclusivity provisions of any existing supply agreements with retailer and wholesale customers of jarred baby food and infant cereal;
• not enter into agreements which require or provide more favourable treatment (including lump sum payments) in exchange for such exclusivity;
• not engage in tied selling of its jarred baby food and infant cereal products;
• not provide volume discounts which induce exclusivity;
• limit the terms of its supply arrangements for jarred baby food and infant cereal to one year except when meeting competitive offers of a longer duration;
• advise all users of gravity feed racks that they may be used to display any brand of jarred baby food.

The Bureau initiated this inquiry into jarred baby food in July 1997 and extended it to infant cereal in July of 1999. The conduct of Heinz Canada was addressed under the abuse of a dominant position, tied selling and exclusive dealing provisions of the Competition Act.

A copy of the undertaking is available on the Competition Bureau web site: as an attachement to the backgrounder to this Release. In light of the voluntary undertaking, the Bureau concluded that the concerns have been fully addressed and it is not necessary to apply for an order from the Competition Tribunal. Consequently, the inquiry has been discontinued.

For further information, please contact:

Madeleine Dussault
819-953-4351

Julie Hébert
819-953-4257