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McCormick Agrees to Divest Seasoned-Salt Business


Buckling to pressure from the U.S. Federal Trade Commission (FTC), McCormick & Company has agreed to sell off its $18 million seasoned salt business as part of its bid to acquire two brands of marinades and seasoning products from Unilever N.V. The company said it will sell its Season-All business to the Morton Salt Group for $15 million in cash, clearing the way for FTC approval.

McCormick, which manufactures and sells a variety of spices and seasonings, announced last November that it planned to acquire the Lawry and Adolph brands of marinade, spice, and seasoning products from Netherlands-based Unilever. Had the acquisition taken place, McCormick would have controlled nearly 80 percent of the U.S. market for seasoned salts.

The FTC challenged the acquisition, claiming that the proposed transaction was anticompetitive and in violation of Section 5 of the FTC Act and Section 7 of the Clayton Act. The market for seasoned salts is highly concentrated, the FTC argued, with the Season-All and Lawry brands comprising most of the $100 million in annual sales in the United States. Both brands have a loyal customer base, as evidenced by the fact that consumers would not switch brands even if they were faced with a five to ten percent increase in price, the FTC said. The FTC worried that consumers, who benefit from the competition between the two brands through reduced prices, discounts, and product innovation, would suffer under the deal.

Under a proposed consent order issued by the Commission, McCormick will divest its Season-All business to Morton, an up-front buyer approved by the FTC, within 10 days of acquiring the Lawry brand. McCormick is also barred for 10 years from acquiring any other seasoned-salt product without giving the FTC prior notice. The agreement does not prevent McCormick from expanding its own line of Season-All products, the FTC said.

The FTC said it plans to publish an announcement regarding the agreement in the Federal Registrar shortly. The agreement will be subject to public comment through August 28,2008, at which point the Commission will decide whether to make it final.

Click for a copy of the proposed agreement can be found here.

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