Statement on the breakfast cereals industry

Abstract

This summary of my recommendations as advisor to the US District Court in an antitrust proceeding involving the acquisition by Post of Nabisco Cereals is based almost entirely on the evidence in that case. There is ample basis for dissatisfaction with the performance of the industry—especially with its comparative absence of everyday price competition, except where private brands bulk large. There is no reason to believe, however, that the merger at issue would weaken price competition or that if Nabisco were sold to some other entity it would be any more willing to dilute the value of its Shredded Wheat brand by selling product for private labeling. On the other hand, the merger would probably make the combined entity more effective in the ways in which the industry typically competes—including heavy distribution of coupons and specials, which are undeniably a form of price competition. [EconLit cites: L100, L410, L660] © 1999 John Wiley & Sons, Inc.