Part C: A merger in premium ice cream?
A few years ago, US antitrust officials faced the following case. Nestle, producers of Haagen-Dazs wanted to merger with Dreyers, another producer of what is called “superpremium” ice cream. Those opposing the merger pointed about the combined market share of Nestles and Dreyers would be 56% so that along with Unilever, producer of Breyers and Ben&Jerrys, three firms would sell 97% of the “superpremium” ice cream in this half-billion dollar market.
Those in favor of the merger countered that the total supermarket ice cream sales are much greater, in excess of $1 billion because consumers can choose non-superpremium ice cream in which Nestle and Dreyer would command only 22% of the market and Unilver an additional 21%
What is the best way to measure the market for ice cream: superpremium or all supermarket ice cream?
Should the merger have been allowed?
(For the actual FTC ruling see: http:www.ftc.gov/opa/2003/06/nestle.htm)