Wednesday, June 11, 2003

Antitrust News: Nestle Shakedown Nears Completion

FTC staff attorneys have apparently reached a final agreement with Nestle over the company's acquisition of Dreyer's ice cream. I first discussed this case on March 5, just after the FTC's five commissioners voted to block the deal unless concessions were made. Those concessions now appear to include divesting several ice cream brands to CoolBrands International, a Canadian ice cream producer, and several distribution assets.

Obviously the FTC's actions here were outrageous. FTC staff invented an artificial market—"superpremium ice cream"—as a pretext for fulfilling FTC Chairman Tim Muris' existing vendetta against Nestle, which he simply thinks is too big and successful a company. But a share of the blame must also be assigned to CoolBrands, which is playing the part of a war profiteer here. CoolBrands is acquiring a number of product lines it did not earn in the market, but rather received as a gift from government regulators. How the FTC can claim this is "protecting the free market" is beyond my comprehension.

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