| **Concurring Statement of    Commissioner Orson Swindle**in *Nestle S.A./Ralston Purina Co.*, File No. 011-0083 

The Commission has accepted for public comment a consent    agreement to resolve complaint allegations that the effect of Nestle S.A.'s    ("Nestle") acquisition of Ralston Purina Co. ("Ralston") may be to    substantially lessen competition in the market for the sale of dry cat food in the United    States. To remedy these competitive concerns, the merging parties have entered into a    consent agreement under which Ralston would divest its Meow Mix and Alley Cat brands to    J.W. Childs Equity Partners II, L.P. ("J.W. Childs"), an investment firm that    owns the Hartz line of pet care products. Because the divestiture to J.W. Childs is likely    to replace the competition in the market for dry cat food that otherwise would have been    lost due to the Nestle/Ralston merger, I have voted to accept the consent agreement for    public comment.

One provision in the proposed consent agreement is unusual    and may raise concerns, however. Paragraph VI of the Proposed Consent Order requires J.W.    Childs, for a period of five years, to obtain Commission approval before selling all or    substantially all of the assets acquired in the divestiture. The Analysis to Aid Public    Comment explains that the Commission does not routinely impose such prior approval    requirements, but it is appropriate to do so "where the proposed acquirer's current    plans indicate that there is a high probability that the assets will be resold, possibly    within 2-5 years." The purpose of the prior approval requirement is to make certain    that whoever buys the resold assets from J.W. Childs would be a sufficient competitor to    remedy the lessening of competition from the Nestle/Ralston transaction alleged in the    complaint. *See* Paragraph VI.F. of the Proposed Consent Order.

I agree that J.W. Childs warranted a hard look as a    prospective buyer because it might resell the divested assets in the near future. It is    possible that this close scrutiny would go for naught if J.W. Childs were promptly to    resell the assets to a less qualified buyer. On the other hand, this risk is always    present - - even had the assets remained in Ralston's hands. I think that our approval of    J.W. Childs as the buyer means that we have determined that, in spite of any possible    resale plans, the company will develop and employ the assets as vigorously as Ralston    would have done. Once we have made this determination, I question the need for imposing a    prior approval requirement on J.W. Childs that we would not have imposed on a buyer that    was less likely to resell the assets.

I also think that the prior approval requirement may require    that the Commission make a difficult determination. For example, assume that J.W. Childs    seeks prior approval to resell the assets four years after the Nestle/Ralston merger has    been consummated. The Commission presumably will have to determine whether the prospective    buyer of the resold assets will compete as effectively as Ralston would have competed in    the absence of the Nestle/Ralston merger. Given the passage of four years since the merger    and the dynamic nature of markets, it may be difficult for the Commission to make this    determination with a high degree of confidence.

I welcome public comments on the prior approval provision    included in Paragraph VI of the Proposed Consent Order, including any suggestions for    distinguishing between situations where the additional relief may be justified and those    where it is not.UBLIC "-//IETF//DTD HTML//EN"> |
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