Friday, September 25, 2009


Big fish swallowing smaller ones is a natural phenomenon and no one needs to be too much concerned about the fate of the poor small fish as it is the law of nature for survival. But it does become a matter of concern when it comes to mega mergers in the food or pharmaceutical sectors as it has potential for stifling competition and create monopoly, damaging consumer interests.

The reported courting of Cadbury by the global giant Kraft Foods is being viewed with interest by the industry and could be a fore runner for similar mergers in future. "Several analysts said that a Cadbury acquisition could make sense for Kraft, which would greatly expand its confectionery business. Cadbury would also give it strong sales in emerging markets, like India, where the chocolate maker has strong sales and has seen impressive growth".

In India the existence of MRTP commission or its new avatar, Competition Commission of India, is supposed to take care of such mergers and market manipulations, though food industry so far had no occasion to face any action from this regulatory agency. Probably very few Indian players in the food field are big enough to be noticed and almost all large scale manufacturers are multinationals with their roots outside the country. How far mergers between two companies outside the country will affect their independent operations within the country after the merger remain to be seen. At the present level of development of food sector where processed food consumption is very low, such mergers may not be of much concern to the consumers, at least for the time being.


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