Party: Walkers Snacks Limited (WSL)
Issue: Walkers Snacks Limited's trading practices, in particular
its rebate scheme.
Relevant provision: Chapter II prohibition, Competition Act 1998 and
Article 82, EC Treaty
Outline of case
In the summer of 2002, the OFT considered the proposed acquisition by a
WSL-related company of the 'Wotsits' snack brand, and associated
production and distribution facilities, from Golden Wonder. The report
on the Director General of Fair Trading's merger advice (see note
1) noted that significant concerns had been
expressed in relation to WSL's trading practices. Following the
clearance of the merger, the OFT opened a case file and invited
submissions from relevant parties.
Submissions received alleged that WSL was abusing a position of
dominance in the relevant market in the UK, through a range of
practices, including growth rebates, financial inducements and solus
agreements, and that these practices led to significant foreclosure of
the relevant market. In particular it was alleged that WSL's growth
rebates foreclosed the market by linking the discount customers received
on WSL products to the percentage increase in the annual volumes they
purchased from WSL.
In February 2003, the Director General found that there were reasonable
grounds for suspecting an infringement of the Chapter II prohibition on
the basis of information available about WSL's practices, and opened
the investigation under section 25 of the Act.
In its investigation, the OFT considered the relevant market, dominance
and whether WSL's practices, in particular its growth and qualitative
rebate schemes, were in breach of the Chapter II prohibition and Article
82, having regard to relevant case law.
The OFT obtained extensive evidence on the features of WSL's growth and
qualitative rebate schemes and their impact on customer decision making
in relation to purchasing, listing and promotional decisions in the
provisional relevant market. The investigation uncovered no evidence
that the WSL rebates had a material impact on customer decision making
or on the process of competition generally. Although the OFT cannot
altogether rule out the possibility that the WSL rebates resulted in
some degree of foreclosure, it is unlikely that such foreclosure is
material and therefore unlikely that material consumer detriment has
The OFT's investigation of other alleged practices did not yield
sufficient evidence to warrant further investigation.
The investigation is incomplete. In relation to market definition, the
OFT has reached a provisional view only and a number of questions remain
outstanding in relation to dominance. Further, the OFT has not prepared
or issued a Statement of Objections ('SO') and has therefore not had
the benefit of any responses to an SO that WSL or any third parties
Having regard to its prioritisation criteria (see note
2), the OFT weighed up the potential benefits
of pursuing the WSL investigation against the potential benefits of
diverting resources to other cases. In particular the OFT considered the
fact that it was unlikely that the rebates gave rise to material
consumer detriment. The OFT also took into account the substantial
resources over a significant period of time which would be required to
pursue this case.
In light of these factors, the OFT decided, after consultation, to close
the WSL investigation on the grounds that it does not constitute an
Case reference: CE/1604-02
‘Proposed acquisition by Frito Lay Trading Co GmbH, a subsidiary
of Pepsico Inc, of certain assets of the Golden Wonder Group Ltd, namely
the Wotsits brand and associated production and distribution
facilities' – A report under section 125(4) of the Fair Trading Act
1973 on the advice of the Director General of Fair Trading, given on 8
July 2002, to the Secretary of State for Trade and Industry under
Section 76 of the Act.
(pdf 72 kb)