ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, May 25, 1996 TAG: 9605290024
SECTION: BUSINESS PAGE: A-8 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
THE ANTITRUST DIVISION is examining whether some snack food companies buy excess shelf space to keep competitors out.
Justice Department watchdogs are sniffing around the potato chip and cheese puff aisle of your grocery store.
The agency's antitrust division has opened an investigation of the snack food industry and is asking if Frito-Lay Inc. is gaining an unfair advantage by gobbling up shelf space in grocery stores.
Bill Brooks, a Justice spokesman, declined to name specific targets Friday but confirmed that antitrust investigators are ``looking into the possibility of anti-competitive practices in the snack food industry.''
The Justice review is in a very early stage, but several industry officials have been answering questions about the highly competitive business of obtaining optimal store shelves for snacks most cardiologists and dietitians would have people avoid.
Nicholas Iammartino, vice president of public affairs at Borden Inc., a Frito-Lay competitor, said Justice investigators have contacted his company about Frito-Lay.
``They raised some questions about the Frito-Lay acquisition of former Eagle Snack plants and more general practices in the industry,'' Iammartino said. He would not comment further except to confirm that Borden is not a target of and did not initiate the government investigation.
``We've simply responded in recent months to questions asked by Justice,'' Iammartino said.
An executive of another leading snack food maker said he too was contacted by Justice investigators asking about Frito-Lay and about snack makers' payments to grocers for display of their products.
``It's hard to talk about snack foods without talking about Frito,'' said the executive, who spoke on condition his name be withheld.
Frito-Lay, based in the Dallas suburb Plano, is the country's largest snack food company, holding more than half of the nation's $15 billion snack market. It has a network of 42 plants producing Fritos, Doritos, Rold Gold Pretzels and Lays potato chips. Recently, it has expanded into lower-fat snacks, including Baked Lays and Baked Tostitos.
The company, a unit of PepsiCo. Inc. of Purchase, N.Y. earlier this month announced plans to build a $150 million snack food factory and warehouse in Lynchburg. The plant, to begin operations in early 1998, is expected to employ as many as 800 people within its first decade.
A person familiar with the federal investigation, speaking on condition of anonymity, said the Justice review is examining slotting fees paid to grocers for shelf space and whether some companies buy excess space to keep competitors out. Such fees are a substantial business cost for snack producers, an industry official said.
Frito-Lay spokeswoman Lynn Markley said Frito-Lay worked closely with Justice investigators to put to rest questions over its Eagle Snacks acquisition. Justice officials haven't contacted Frito-Lay about payments to grocers or possible anti-competitive actions in the industry, she said.
Justice officials emphasized the Eagle Snack review has been completed and the investigation of the snack food industry is separate.
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