U.S. Probes Snack Food Industry

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 salty 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 Department 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 review is in a very early stage, but several industry officials have been answering questions about the highly competitive business of obtaining optimal placement on store shelves for snacks.

Nicholas Iammartino, vice president of public affairs at Borden Inc., a Frito-Lay competitor, said Justice investigators have contacted his firm 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.

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.

Frito-Lay, based in the Dallas suburb of Plano, is the country’s largest snack food company, holding more than half of the nation’s $15-billion salty snack market.

The company’s 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.

“While we have not been accused of any wrongdoing, we will fully and openly work with the department or anyone else,” Markley said.