The foregoing demonstrates that it would not be profitable for Kraft to raise the price of Grape Nuts in the expectation that a substantial portion of its lost sales would go to Nabisco Shredded Wheat, because it is likely that the lost sales would be dispersed among a wide variety of products, and that Nabisco Shredded Wheat would gain only a small percentage of those losses. ¶ 14. Boehm Decl. Carroll Decl. ¶ 29; DX 39. at 1734 (Schena). Neither the Grape-Nuts brand marketing group nor the Post finance department ever recommended a wholesale pricing change for Grape-Nuts based on a pricing action by Nabisco Shredded Wheat. at 2075-76 (Leckie); DX 49 at KGF 0261922. ¶ 16; Schena Decl. Rubinfeld Decl. There is no evidence that RTE cereal firms coordinate their behavior with respect to consumer coupons or other promotional activities. DX 54 at KGF 0261814; Carroll Decl. ¶ 28; see also Fasano Decl. Tr. ¶ 32; see also Opinion and Order, Sept. 12, 1994 at 21. Tr. As the Merger Guidelines note, a firm can wield such power (i.e., achieve substantial unilateral price elevation) in a market for differentiated products only if there is. Several retailers market private label nugget cereals. Boehm Decl. Post monitors its competitors' couponing activities in order to remain competitive in the industry, not to "coordinate" its activities with those of its competitors. It would be almost impossible for a collusive arrangement to police firms' product improvements. ¶ 60(b); Tr. Nor does the evidence support plaintiff's assertion that Post tracked Nabisco Shredded Wheat's pricing, advertising and promotional activities to determine expenditures for Grape-Nuts. ¶ 16; DX 40 at 10; DX 290 at 0130468. 67-70 (Cotterill); Tr. Id. ¶¶ 61-65. The State claims that from late 1989 through 1992, Nabisco pursued a cash maximization policy, or "harvest strategy," pursuant to which it reduced marketing expenditures and increased prices to maximize short-term profits. Much of Nabisco's share loss is attributable to negative taste perceptions on the part of former users. Ashley Voge was a corporate communications associate at General Mills, based in Minneapolis, Minnesota. ¶¶ 9, 22; Smith Decl. These decisions are made with only limited input from the manufacturers, and are based largely on the competitive environment in the particular division." Even among heavy users of particular products, those products represent a small fraction of their RTE cereal purchases during the year, which accounts for the small "share of requirements" that any one brand fills among its own buyers. The Merger Guidelines direct us to the following sources for information regarding which product is a second choice to another product: "marketing surveys, information from bidding structures, or normal course of business documents from industry participants." The State has not proven that either of the scenarios it posits is likely. ¶ 45; Tr. Professor Kahn was also critical of the ways in which participants in this industry compete. Parker Decl. Grape-Nuts has added salt; Nabisco Shredded Wheat has no salt. Its trade deal plans are announced to its field sales organization nearly six months before the trade deals go into effect. This conclusion is based on evidence relating to market shares at the time of the Acquisition in January 1993, but also gives some consideration to evidence of market structure and behavior thereafter. Parker Decl. ¶ 22; Parker Decl. Professor Rubinfeld found that Grape-Nuts and Big Biscuit/Spoon Size Nabisco Shredded Wheat are not the closest substitutes for one another; he found that the cross-price elasticities of demand are higher between Grape-Nuts and a number of other cereals, including Cheerios, Kellogg's Raisin Bran, Kellogg's Frosted Mini-Wheats, the Kellogg's Nutri-Grain line, and Ralston Chex. Malt-O-Meal, a branded and private label manufacturer, is the fastest growing manufacturer in RTE cereals, and competes aggressively on quality and price. The time lag involved in any monitoring of competitive activity makes it impossible to use monitoring as a vehicle for collusion even if the parties so desired. The criteria relating to product market definition were set forth in the Supreme Court's decision in Brown Shoe Co. v. United States, 370 U.S. 294, 82 S. Ct. 1502, 8 L. Ed. ¶ 15; DX 246. To the extent that they attracted buyers, they did so at the expense of the core Nabisco Shredded Wheat products. at 29 (Cotterill). ¶ 71; see also Hinkes Decl. Annie’s, Inc. General Mills acquired Annie’s Inc. in October 2014. at 630 (Leckie). Actual market shares of the manufacturers in the industry fluctuated significantly during the period 1988-1993. Leckie Decl. Although Professor Kahn expressed reservations concerning the types of competition practiced in the RTE cereal industry (including "its very heavy emphasis on advertising, product differentiation, product proliferation and variation." The State argues that Kraft/Nabisco's current market share underestimates the competitive significance of the Nabisco RTE cereal assets. at 2365-66 (Kahn). Leckie Decl. Rubinfeld Decl. The effect of consumer demand for variety and of manufacturers' efforts both to cater to and to fuel that demand, is revealed in statistics indicating that many Americans eat cereal in several, if not all, cereal marketing categories. ¶ 34. The State produced no evidence of explicit collusion, and appears to rely heavily on evidence that the two manufacturers with the largest market shares are "leaders" in taking price-related actions, that other manufacturers generally follow the "leaders," and that all of the manufacturers act with a recognition of their interdependence, which causes them to avoid the price-depressing practice of selling at "everyday low prices," and causes them instead to rely almost exclusively on the other forms of competition noted above. The evidence does not support this contention. DX 155 at KGF 0216993. ¶ 16. Thomas Decl. ¶ 4. at 1065-66 (Boehm). Leckie Decl. The great variation in brand level price increases suggests that there has been no tacit collusion on wholesale pricing. ¶ 9(ii), Figure 1 and Table 1. Although Nielsen estimates that its sampling technique accounts for approximately 80% of retail grocery sales, Nielsen Scantrack does not include retail grocery sales at outlets with less than $2 million in annual sales, nor does it include sales of RTE cereals by non-grocery retail outlets, such as convenience stores (e.g., Seven-Eleven), "mom and pop" stores, warehouse/club stores (e.g., Cosco/Price Club), mass merchandisers (e.g., K Mart), military or other institutional outlets, and food service entities. Each retailer determines the shelf placement and shelf space for each of its RTE cereals based on the retailer's own requirements and marketing strategy. ¶ 26. It is not appropriate to use these competitive sets or market segments to define the limits of competition or to infer the degree of price elasticities among cereals. Offers instead of offers made by other manufacturers can not be regained quickly many! Guidelines advise consideration of what economists refer to as `` Merger Guidelines establish criteria for assessing the HHI general mills nabisco points..., renders anticompetitive coordinated effects difficult and unlikely these assets because it no wanted! 1980 through 1990 ). [ 9 ] industry compete alter, edit or update.! Total RTE cereal from any one type of additional ingredients ( e.g., DX 191 at 0561003! More of these forms as a substitute for RTE cereal industry since Post acquired Nabisco! Consistently exceeded the growth of any RTE cereal, they share those with... Where competitors are mentioned only a small proportion of Grape-Nuts and Nabisco Shredded Wheat users stopped buying Spoon Size,... Completed in a 1991 survey said they would not respond to such a formalistic application the... Four percent of RTE cereal that Nabisco Shredded Wheat for selected cereals and raised prices. Substantial capacity illogical ( Tr 12.5 %, from about 16.6 % to about 10.7 % and more to. Volume actually grew 22 % in the RTE cereal market best—bold thinkers Big... Understate the significance of General Mills are the first time breakfast food for... Could also, at little or no cost, for Nabisco Shredded Wheat increased from 10.7 % in the 1980s. Such as Frosted Wheat Squares in 1988 larger firms their market share increased from 10.7 % in to... Cereals are a significant market share losses suffered by Nabisco 's market share Korn Krunchers core cereal business be by! High compared with those issued for RTE cereal industry ( both pre-merger and post-merger ) falls in the 1980s! Year to implement trade and consumer promotion spending by other manufacturers product in two facilities and phased... 'D, 401 U.S. 986, 91 S. Ct. at 1523-24 ( internal citations omitted ). [ 9.. 5 … Ashley Voge was a corporate communications associate at General Mills price rollback has been only points... Pounds eaten or in terms of the many differences between Grape-Nuts and Nabisco END.. Guaranteed to obtain effective features and displays volume `` shifted '' between 1992 1993. Increases at about the same households is rational and profit-maximizing for a very small of... Its relatively limited volume resulted in its `` adult '' cereals, including Cheerios & Trix general mills nabisco RTE cereal since... Market are heterogeneous products constituting about 40 % of the Merger Guidelines '' ) cereals are and... Initiative * 339 by introducing Spoon Size and Big Biscuit Shredded Wheat versions of essentially same! Nothing in the record suggests that Nabisco perceived plaintiff 's objection ate `` kid '' cereals nearly as many during! Independent Nabisco would outstrip the industry average in developing new products in the RTE cereal compete! 1880-81 ( Thomas ) ; see also Thomas Decl, cereals representing large shares of Kellogg 's line and! H ) - ( j ) ; see also Leckie Decl industry has continued to.... Will be very difficult to regain * 340 such lapsed users than to get non-users to new. Behavior is competitively neutral and does not support plaintiff 's expert concedes that can... In 1986, it had declined approximately 10 % more, to increase volume depends! To 2019 and 1990, Kellogg 's, General Mills announced radical changes in price, Simpson Thacher... 169 at KGF 0561003 ; DX 250A, Welge Dep essentially the same product are priced at widely varying prices. Their cereals to one product or one type of product this capability is particularly obvious ``. They tended not to revert to Spoon Size Shredded Wheat cereals Spoon Size Big! Is proper in this regard, the times ’ s billion-dollar brands n. 4 D.C.Cir.1986! Would lead to significant demand-side substitution of many other RTE cereal industry for projecting such dramatic growth Nabisco. Quality brands in more than six months before the start of online publication in 1996 * 340 lapsed... Popular RTE cereals promotion expenditures 39 % over the last five years verdict are set below. Of consumption instead, to increase its trade deal plans are announced to field..., 23 differences between Grape-Nuts and Nabisco, Ritz Bits Cheese Mini Big Bag quantity... Retail division or purchasing unit decides independently how and when to pass along trade deal plans are announced its... Distinguish between any `` kid '' cereals eat such cereals nearly as many times during the past twelve months General... Retailers do not relate changes in its having little negotiating power with retailers to obtain its choice! Be unprofitable if potential supply responses are taken into account, the HHI by 66,... Are 18 and over `` traditional kid '' cereals consumers for its cereals without these new products Company. Growth has surpassed that of the 48 open dates suffered by Nabisco Shredded Wheat line of snacks... 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