INVESTIGATIVE TECHNIQUES WORKSHOP:

MERGERS AND ACQUISITIONS

Interview Materials

United States Department of Justice

Antitrust Division

and

United States Federal Trade Commission

DOJ/FTC Investigative Techniques Seminar                                        Merger Investigations

INTERVIEW MATERIALS

TABLE OF CONTENTS:

Pedro Fillol ......................................................................................................................................2

Juana Olguin ....................................................................................................................................5

Eduardo Galvan ...............................................................................................................................8

Maria Passarella.............................................................................................................................10

Elizabeth Tarantini.........................................................................................................................12

Esteban Ardiles ..............................................................................................................................14

Felipe Gallego................................................................................................................................16

Ana Kempes...................................................................................................................................18

Jose Bertoni....................................................................................................................................20

Enrique Luque................................................................................................................................22

Francisco Ortiz...............................................................................................................................24

Pablo Houseman ............................................................................................................................26

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Interview Information for Pedro Fillol

Background information for the person playing the role of Pedro Fillol.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Pedro Fillol

Job title: Production Manager

Employer: Martucha Tomato Sauce Company (a Panagra corporation owned by Conglom, a

Spanish conglomerate)

You have worked at the same factory for thirty years. You are an engineering graduate
of Martucha University, with a specialty in production engineering. You began working as a
beginning engineer in the former Ogorco company. Over the years, you were promoted several
times, and now you are in charge of all production at the Martucha factory. You own a small
amount of Martucha stock.

If asked, you can explain the following about the history and production processes. You
are fond of the historical side of things and often will answer questions mainly with historical
stories rather than direct answers. Thus your answers should wander and not be very responsive
to the questions asked.

Production Processes

Historically, the manufacturing of tomato sauce was a relatively simple operation.

Tomatoes grown in the southern region are crushed and mixed with tomato paste and herbs. For
certain variations, meat and spices may be added. The mixture is then cooked. At the end of
that time, the tomato sauce is ready to eat or be canned. The tomato sauce was sold at open air
markets to customers who provided their own containers. At the turn of the century, producers
began to offer the tomato sauce in jars so that they could be shipped and stored without risk of
spoilage. The producers adopted home-style canning operations: glass jars were boiled to
remove any bacteria, then filled by hand and sealed. This method, however, was quite expensive
because it was labor intensive and the glass jars used for canning were purchased in small
quantities at relatively high prices. Furthermore, the home canning methods used by the local
producers did not always eliminate all of the bacteria and other contaminants, so there was a
relatively high rate of spoilage. A large number of small local tomato sauce producers came into

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existence, mostly selling in their local regions where the glass jars could be easily and cheaply
shipped without breakage, and where they could be delivered quickly to minimize the risk of
spoilage.

Fifty years ago, the government took over the manufacture and distribution of tomato
sauce as part of a broad program to nationalize various industries. A large number of small
tomato sauce producers in the south of the country were taken over by the government and
joined into one enterprise. The small scale manufacturing processing plants were replaced by
three separate factories, each housing a large, 5,000 liter stainless steel vat. The tomato paste is
prepared at a central location and shipped via tank truck to the vats. An ancient recipe is used to
prepare the tomato paste. The manufacture is as follows: the vats are filled with tomatoes,
tomato paste and herbs. For certain varieties, meat and spices are added. Proper flavoring
requires the mixture to be cooked at particular temperatures for several hours. It is then allowed
to cool completely. Heating elements in the vat bring the mixture to the proper cooking
temperature. Because the tomato sauce is mixed and cooked in the same container, the more
modern approach reduces the processing time. It takes about two days for each 5,000 liter batch.
With vats so large, it takes a lot of time to fill them, get them back up to the correct temperature,
and to clean them.

Each of the three factories has a substantial canning facility built 15-25 years ago. Each
canning facility is modern and automated, capable of canning 3,000 one-liter jars of tomato
sauce per day. Because of the automation, the labor component is dramatically reduced and the
cost of canning has also been reduced. In addition, the quality control is much better, and
spoilage of canned tomato sauce is a rare occurrence. Each canning facility is also equipped to
can larger, commercial size 100-liter drums of the tomato sauce.

You know that the Sanfor and Candaro factories have exactly the same equipment and
capacity as the Martucha factory. All three were built from the same plans and at about the same
time. This was part of a modernization process that took four years in the early 1970s.

With the upgrading of the manufacturing and canning facilities, Conglom/Martucha,

Sanfor, and Candaro were able to increase production of the tomato sauce tenfold, and as a result
of the increase in volume, the cost of the tomato sauce was cut in half (in constant terms). At the
same time, consumption patterns changed. Today, the number of people who produce tomato
sauce at home is dwindling; many find that it is too time consuming to make tomato sauce, and
since the price of Ogorco-style tomato sauce has decreased significantly, it is more attractive to
purchase tomato sauce rather than make them. Commercial purchasers, such as restaurants or
soup companies, account for an increasing portion of the tomato sauce manufactured in Panagra

Input Purchasing

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The tomatoes used in making tomato sauce are normally grown by hundreds or even
thousands of local farms in the regions of the factories. Farmers commonly enter a contract with
a particular factory in advance of the growing season; and then grow tomatoes according to the
instructions of the factory and are paid the contract price. Some farmers grow tomatoes without
a contract and sell their crop to the factory offering the highest price. If they expect the price to
be unattractive in a particular year, farmers may grow tomatoes for the fresh vegetable markets,
or else may grow soy.

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Interview Information for Juana Olguin

Background information for person playing the role of Juana Olguin:

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Juana Olguin

Job title: General Director

Employer: Candaro Tomato Sauce Company (a Panagra corporation)

Candaro markets its tomato sauce mostly in Southern Panagra. Candaro sells the bulk of
its tomato sauce in Candaro, Miramonte, Valle Viejo, Costa Bonita, Villa Antonio, and
Sevillana. However, Candaro does sell smaller quantities of tomato sauce in other cities in
Southern Panagra.

Candaro feels it competes with both Martucha and Sanfor. However, Candaro feels that
it competes much more vigorously against Martucha than it does against Sanfor. For instance,
Martucha has recently engaged in a series of discounting practices that have dramatically
encroached on Candaro=s territory. Candaro has responded by offering higher discounts, but the
effect on Candaro=s profits would be significant.

Candaro is very concerned about the deal. Candaro believes that by combining with
Sanfor, Martucha will become such a powerful entity that Candaro will no longer be able to
compete with it. Candaro fears that the combined entity of Martucha and Sanfor would be able
to undercut Candaro=s prices and take away all of Candaro=s business.

Candaro also expects that, with its increased buying power, Martucha could force tomato
farmers close to Candaro into exclusive contracts, thereby controlling the supply of tomatoes.
Candaro believes that once Martucha purchases Sanfor, it will want to do all of its contracting
with farmers near Candaro so that Candaro will either have to get its tomatoes from the Sanfor
region or be driven out of the market. Candaro knows of tomato farmers in Sanfor who are very
concerned about this happening. If asked, you would refer them to Esteban Ardiles as an
example of such a farmer.

Candaro has data for the past three years on its sales. However, Candaro is very
concerned about the confidential nature of this information. You should refuse to provide the

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information, giving evasive answers. You should answer only if the questioner tells you that the
Competition Law (1) allows the Agency to compel you to produce the information and (2)
requires the Agency to keep it confidential. [hand out Candaro document 1 - sales data]. To
the extent that the Competition Agency needs more detailed information, Candaro will try to get
it. However, Candaro=s records are not organized in a way in which it can provide any more
accurate information.

Candaro produces tomato sauce in 5,000 liter batches. On average, Candaro can produce
150 batches a year. To produce more would require squeezing in additional more batches in
each year. This would be expensive, because Candaro would have to hire overtime shifts and
pay workers extra to work on the holidays.

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Candaro

Bids Bids Barrels

Year Cases Sold Liters Sold Revenue*
Submitted Accepted sold
1999 not known 6 3876 30068 748416 3205680
2000 36 12 3809 29032 729284 3308440
1995 48 25 3563 27684 688508 3011112
2002 63 24 4037 31563 782456 3170108
(full
year)

* In constant currency, i.e., adjusted for inflation.

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Interview Information for Eduardo Galvan

Background information for person playing the role of Eduardo Galvan

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Eduardo Galvan

Job title: Deputy General Director

Employer: Norco Tomato Sauce Company (a Panagra corporation)

You are the Deputy General Director for the Norco Tomato Sauce Company. In your
current position you assist the general director in administering all aspects of the Norco business.
You have held the position for two years. Prior to holding your current position, you were
director of sales and marketing.

You think that the Norco Tomato Sauce Company is the equal of any other tomato sauce
company in Panagra, even though it consists of a collection of small, old plants assembled under
one owner over fifty years ago. Some of the plants have been somewhat modernized over the
years, although none of them had the major modernization and enlargement that happened at
Ogorco in the south. Being from the less heavily populated north, you generally tend to resent
what you perceive as an attitude of the more urban southerners -- an assumption that everything
that they do is bigger, faster, and better. Indeed, you believe that Norco tomato sauce is superior
because of the smaller batches and more traditional production process.

You have only tried to sell tomato sauce in the south a few times. In 2000, while you
were director of sales, you tried to make some sales in the closest part of the southern region.
You did make some sales, but most of the customers went back to their former supplier after
making one or two purchases from you. You were never really sure why this happened. You
did not care too much, however, since the only way you had been able to make those sales was to
reduce you price almost to the level of your manufacturing costs. You really almost had to take
a loss on the sales.

Transportation is a problem in your region. Indeed, the poor roads and railroads are one
reason why Norco has maintained its separate factories, so each one can stay near to its
customers. In your view, the transport sector is not well organized for long-distance shipment.

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You use your own small trucks for the local and short distance deliveries that you need now. If
you were to start selling many tomato sauces in the south, you would have to start hiring a long-
distance trucking firm. When you did that for those few sales in 2000, you found that the firms
were not reliable because they had many more customers than they had capacity on their trucks.
The cost of shipment added about 15% to your costs in those sales.

If asked, you believe that you could sell more tomato sauce in the south. You think that
the better taste of your tomato sauce would compensate for the slightly higher costs that you
have, with a resulting higher price needed.

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Interview Information for Maria Passarella

Background information for person playing the role of Maria Passarella.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Maria Passarella

Job title: Manager

Employer: Cachin, S.A. (a Panagra corporation)

Cachin owns 12 small pasta restaurants throughout Panagra.

Cachin started from a small stand five years ago, and after its product was well accepted
by consumers, expanded one restaurant at a time to its present 12 locations. Growth has slowed
after other pasta chains entered Panagra, but Cachin still plans to expand to 5 additional
locations in the next year.

Cachin feels it is in substantial competition with other pasta chains, including recent
Western entrants and other, smaller Panagran-based chains. It also competes with single-
location pasta restaurants. It also feels that it competes with other fast food restaurants and
stands selling pizza, asado, and other foods. It also feels it competes with home cooking and
with larger, more elaborate restaurants.

All Cachin pasta is served with tomato sauce on it. Customers expect tomato sauce on
their pasta. All pasta restaurants that Cachin most closely competes with, such as Ripo and Los
Años Viejos, serve their pasta with tomato sauce on them. Customers identify the type of pasta
that they want as having tomato sauce.

Cachin buys tomato sauce from three sources: Martucha/Conglom, Sanfor, and Candaro.
All three provide consistent quality and have the taste that Cachin expects from tomato sauce on
its pasta.

Cachin has not considered buying imported tomato sauce because of their much higher
cost and because Cachin is a Panagran company and likes to promote itself as the Panagran
alternative to foreign pasta chains.

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Cachin has not considered making its own tomato sauce because it does not use enough
to justify investing in the machinery. Nor does it have enough expertise.

Cachin has considered buying tomato sauce from Norco, but is not sure of quality or if
the delivery would be reliable. Once, four years ago, when Ogorco still owned all three southern
tomato sauce plants, there was a strike at Ogorco. Cachin was a small chain then. It could not
get any tomato sauce from Ogorco because of the strike. For several days, it had to sell pasta
without tomato sauce; some customers commented unfavorably about the absence of tomato
sauce. As soon as possible, the owner of Cachin borrowed a friend=s truck and drove to the north
and bought several cases of Norco tomato sauce from one plant or a wholesaler. Several of the
glass jars broke in transit on the way back and the tomato sauce was thinner and more watery
than normally put on pasta, but this arrangement allowed some tomato sauce to be put on the
pasta during the rest of the strike, which only lasted three weeks.

Cachin buys tomato sauce by placing orders with the tomato sauce producer nearest to
each of its restaurants. A salesperson from each of the three companies calls on Ms. Passarella
to try to sell her tomato sauce. She tries to order some from each, so that she has several sources
of supply. Usually the prices are the same. Sometimes one of the salespersons will offer a
special incentive, for example, AIf you buy another 20 cartons, I can give you one carton for
free.@ She also makes choices based on the service provided. In particular, if a company has
given her bad service, such as by missing a promised delivery date, she switches some purchases
away from that company.

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Interview Information for Elizabeth Tarantini

Background information for person playing the role of Elizabeth Tarantini.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Elizabeth Tarantini

Job title: Owner

Company: Almacen del Tarantini (a grocery store in Costa Bonita, Panagra)

You are the owner of a small corner store that sells food and beverages including tomato
sauce. You began operating the store eight years ago. Your store is used almost exclusively by
people that live in the neighborhood. Most of your customers use your store because of the
convenience of shopping at a store near their home. There are a few other grocery stores in your
area. Many customers do not have a car and thus cannot go to the Cisco, a large grocery store on
the outskirts of town. Your prices are a little higher than Cisco=s, but you are also much more
convenient. You stock basic foods (bread, pasta, potatoes, tomato sauce, etc.) and beer and
wine.
When the price you are charged by your distributor for a product increases, you increase
the price you charge. Over the years the prices of tomato sauce have changed, which has
changed the prices in your store. When there have been price changes, you have usually noticed
that some consumers buy less tomato sauce than they did before. You observe this because you
do not have to order tomato sauce as often as you otherwise would. Also customers tend to
complain when the price goes up.

You cannot think of some other kind of food that customers would choose to buy instead
of tomato sauce. You also have never seen a customer decide to buy something else instead of
tomato sauce because the tomato sauce is too expensive.

Your food distributor carries two kinds of tomato sauce: Martucha=s and Sanfor=s. You
stock both on your shelves, charging a proportionately higher price than your distributor charged
you. Usually there is some kind of special offer when you buy the tomato sauce, making one
cheaper than the other. However, the specials switch back and forth between the companies.
You reflect the lower prices that you are charged by offering lower prices to your customers.
Thus, sometimes Sanfor=s tomato sauce is cheaper, sometimes Martucha=s.

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Most customers buy the cheaper jar of tomato sauce, regardless of brand. However, there
are some customers who will only buy one kind of tomato sauce. Those customers tend to wait
for their brand to go on sale. Occasionally, though, you see those customers purchasing the
more expensive brand of tomato sauce because they have run out and need to get more. When
that happens, you usually get complaints from the customer.

Up until about five years ago, you used to make your own tomato sauce using a family
recipe and sell it in the store. However, because it is so expensive to purchase tomato sauce
spices in small quantities and time consuming finding the right size tomatoes, you decided it
wasn=t worth making it yourself. You still have friends who refuse to eat anything but home-
made tomato sauce, but most people you know buy it rather than make tomato sauce themselves.
It is just much cheaper and easier to buy the ones made by a big company.

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Interview Information for Esteban Ardiles

Background information for person playing the role of Esteban Ardiles.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Esteban Ardiles

Job title: General Director

Employer: Cooperativa Ardiles (a cooperative farmers= association in Sanfor, Panagra)

You, and your family before you, have always been farmers in Sanfor. You have
recently formed the Cooperativa Ardiles, a group of farms that have grouped together to more
conveniently sell your produce. The cooperative has been very successful at negotiating higher
prices with food companies, primarily because you are able to consistently provide a greater
quantity of produce as a cooperative than you could individually.

Your farm has always grown a mixture of soy and tomatoes. Usually, your crop contains
a mixture of large and small vegetables. The percentage of large vegetables works out to be
about 10% of the overall crop. You always sell the large vegetables to food markets in the local
area.

You have found that you can usually get better prices from food companies than you can
from food markets for the small vegetables. There are a number of factories that make canned
food products to whom you can sell these vegetables. Specifically, there are three large food
companies in Sanfor that buy your vegetables: The Conglom Salad Company, a subsidiary of
Conglom that sells prepared foods to restaurants; Sanfor Tomato Sauce Company; and Acme, a
large Panagran food company that sells a variety of canned, frozen and dehydrated foods.

At the beginning of each planting season, you talk to fellow farmers and contacts to
gauge the prices you could get for soy and tomatoes. Based on the expected demands of the
different food companies, you decide what mixture of soy and tomatoes you will plant.

When tomato farmers in Martucha have a bad year, the Martucha food companies usually
try to purchase their vegetables from both the Sanfor region and the Candaro region. In the past
you have sold tomatoes to the Martucha Tomato Sauce Company when this has happened.
However, Panagra has just finished a new highway connecting Candaro and Sanfor, so you think

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it is more likely that in the future, Martucha will purchase most of its additional produce from
the Candaro region. You have never sold tomatoes to the Candaro plant when it had a bad year,
because it is too expensive to transport them to Candaro.

You have become very concerned about Conglom=s acquisition of Sanfor. You think the
tomato sauce companies already have too much power over the tomato farmers. You have a
friend in the purchasing department at Sanfor who told you that he had heard the entire Sanfor
purchasing department would be fired after the merger.

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Interview Information for Felipe Gallego

Background information for person playing the role of Felipe Gallego

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Felipe Gallego

Job title: Director of Purchasing

Employer: Panagra Soup Company (a Panagra corporation)

You are the Director of Purchasing for the Panagra Soup Company. In your current
position you negotiate with farmers, distributors and food companies to obtain the ingredients for
your soups. You have held the position for three years. Prior to holding your current position,
you worked in the recipe department, where you did cost analyses of adding different
components to new soup recipes.

Your experience is that it can be difficult to obtain the necessary ingredients for your
soups. It is difficult to find reliable suppliers. Some suppliers cancel contracts at the last
moment, provide you with low-quality goods, miss deadlines or deliver long before the agreed
upon date, and generally violate the terms of your agreements.

In order to adapt, you have done two things. First you develop ongoing relationships
with specific salesmen. You have found that when you can guarantee repeat business, you have
a much better chance of forcing the supplier to fulfill the agreement. Second, you have learned
ways to keep suppliers honest by maintaining a second source, or sometimes a third source, for
the supplies you need.

In the tomato sauce industry in particular, you have dealt with representatives from
Candaro, Martucha and Sanfor. You would describe Sanfor as the least reliable source of tomato
sauce. Their sales representative sometimes offers you good deals -- especially in 2001, they
offered good prices. But with Sanfor, you are always suspicious that he will back out at the last
moment. On the other hand both Martucha and Candaro are very reliable suppliers. You
particularly like Candaro because of its proximity to Valle Viejo. Martucha is good too, though
you find their sales representative, Larrosa, to be very pushy. He calls you up a lot looking for
business and, even when you are practically rude, he will not leave you alone.

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If asked, you do remember an instance where Larrosa tried to get your business for a new
soup recipe after you had already agreed to get the tomato sauce from Sanfor. Larrosa had come
to you and proposed that you do a side-by-side comparison of Sanfor=s tomato sauce with his
when you got the first shipment. This is typical Larrosa, assuming that you were not aware of
exactly what kind of tomato sauce you would be getting.

As it turned out, though, it all worked for the best, because a day later you got a call from
the Sanfor representative who told you that he would not be able to deliver the tomato sauce on
time. You immediately threatened to cancel the entire deal, saying that if you did not get your
tomato sauce on time you would do the deal with Larrosa. The Sanfor representative ended up
not only delivering the tomato sauce only three days late, but he also gave you a free barrel for
each delivery.

You are a bit concerned about the merger. The quality of the deals you can make are
directly related to the number of alternatives you have. However, Sanfor is by far the worst
supplier in your opinion, so you are not as concerned about the acquisition as you would be with
a combination of Candaro and Martucha. Still, you imagine that with more tomato sauce to sell,
Larrosa will be even more persistent about bothering you.

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Interview Information for Ana Kempes

Background information for person playing the role of Ana Kempes.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Ana Kempes

Job title: Director of Sales

Employer: Martucha Tomato Sauce Company (a Panagra corporation owned by Conglom, a

Spanish conglomerate)

You were formerly employed as a sales person by another Panagra food products
company. Then you began working as a salesperson for Martucha, were promoted to regional
sales manager, and just recently promoted to Director of Sales. You report to the General
Director, Jose Bertoni.

You are an enthusiastic, active person. You are eager to advance in the business world,
and want to make a good impression on your bosses.

In your job, you see Sanfor and Candaro as your big competitors. Most of your time and
energy is devoted to directing your staff to compete with them. Both you and your staff are paid
in part on a commission, that is, a percentage of the sales revenue that you generate.

February 1 memo. You wrote this memo in response to a request from your boss, Jose
Bertoni. Basically, you just asked questions of your subordinates and included their responses in
the memo. If asked, you will disclaim first-hand knowledge of the things reported in the memo.

Strategic Plan Document: You wrote the strategic plan after you were given the
assignment by Jose Bertoni. You had never before written a strategic plan. In your prior
employment, such formal documents were not common. You talked with Bertoni in preparing
the strategic plan, and many of the ideas in it are ideas you obtained from him.

Now that you have reviewed the document again in the context of the Competition
Agency’s merger investigation, it does seem a little too strong in some ways. It was only a draft,
never finalized, as far as you know. Initially, you should try to say that the memo contains
mainly your own ideas, (but if pressed with questions, admit to the input from Bertoni and that

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many of the ideas are his). You should try to say that you were just trying to impress the
corporate headquarters that you were an aggressive marketer, and maybe you over-stated some
things. You should try to say that you are a salesperson by nature, and it=s your nature to be
enthusiastic and tell things in a dramatic way, and this doesn=t necessarily reflect reality. In
general, you should try to avoid admitting anything from the document unless directly forced to
do so by the questions.

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Interview Information for Jose Bertoni

Background information for person playing the role of Jose Bertoni.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Jose Bertoni

Job title: General Director

Employer: Martucha Tomato Sauce Company (a Panagra corporation owned by Conglom, a

Spanish conglomerate)

You have been with Martucha Tomato Sauce Company and Ogorco before that for over
twenty years. You started out as an engineer supervising the delivery of tomato sauce. You
started out in the Martucha factory, but moved up to being in charge of the delivery schedules for
all three factories. When Ogorco was privatized, you decided to stay with Martucha and started
out as the assistant to the General Director, an officer of Conglom. You quickly developed a
good relationship with Conglom and, when the General Director moved to another division of
Conglom, you were appointed General Director.

After you became General Director, the company began to experience a decline in sales.
You are not really sure what happened to cause the decline, but through hard work and by
bringing in new people, you were able to turn the company around. Over that period, you were
monitored very closely by Carlos Menotti, the Regional Director for South America at Conglom.
While you were able to develop a good working relationship with him, you found his constant
demands somewhat frustrating. In particular, he would often demand you to write reports
describing the problems you were having rather than just let you fix them.

For one of those reports, you asked Ana Kempes to describe the situation in Southern
Panagra. You vaguely recall her writing a memo and sending it to you, which you then
forwarded on. However, you did not pay much attention to what she wrote, being very busy at
the time. Rossi was apparently pleased with it, however, because he called you back and
bothered you about writing a strategic plan. Again, you delegated the assignment to Kempes,
and discussed it at length with her. She produced a strategic plan document that you forwarded
to Rossi.

After you were required to submit these two documents to the Competition Agency, you

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looked over the documents again yourself, and they seem to overstate the case. You are now
embarrassed to admit that some of the ideas in the strategic plan -- even some of the specific
phrases -- came from you. You have not admitted this to anyone, and certainly would not admit
it to the Competition Agency.

In the first place, while Sanfor and Candaro are your two main competitors, there are a
number of other competitive factors which affect you. For instance, you think that customers are
just as likely to make their own tomato sauce as buy Martucha=s. Also, customers are
increasingly buying imported tomato sauce. Finally, there are a number of other pasta sauces
that people will buy instead of tomato sauce if they feel tomato sauce is too expensive. For
instance, customers often purchase cream sauce or cheese instead of tomato sauce. The problem
is that the document was written by Ana Kempes out of a desire to demonstrate how hard she
and her people were working. However, to take the document out of context and claim that it
describes the state of the tomato sauce market is preposterous.

More importantly, Kempes is still relatively new to the tomato sauce market and does not
know the tomato sauce business. Thus it is easy for her to concentrate on the obvious
competitors and not properly consider other relevant forces.

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Interview Information for Enrique Luque

Background information for the person playing the role of Enrique Luque.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Enrique Luque

Job title: Director of Finance

Employer: Sanfor Tomato Sauce Company (a Panagra corporation)

As Director of Finance, you are the top responsible person in the Sanfor company on
financial issues. You have had this job for two and a half years. Before that, you worked in a
bank, the Commercial Bank of Sanfor Province. One firm that you worked with was the former
Ogorco Tomato Sauce company. After it was split up, you continued to work with the Sanfor
Tomato Sauce Company. Your bank was one of the major lenders to the new Sanfor Tomato
Sauce Company, and when that company got into serious financial difficulties, its bank lenders
traded their debt for ownership shares. At that time, you were installed as Director of Finance
for Sanfor.

Except for a brief period right after the banks took it over, the company has never been in
good financial shape.

For example, the company has not paid its local taxes for three years. You have told the
local authorities that if they force payment of the taxes, they will risk shutting the plant and
causing a lot of unemployment. So far, this approach has kept them from taking any strong
action.

Currently the company is very slow paying its suppliers. Some have threatened to stop
selling to the company, but so far they have continued to sell, because they do not have many
other options.

Farmers have always been paid in cash for their tomatoes, and that has continued now.
In the last harvest season, the company had great difficulty obtaining enough cash. It offered
deep discounts to its customers if they would make advance purchases and pay in cash, and
many bought extra -- a two- or three-month supply -- because the price was good and they knew
the company needed the money. Even so, the banks had to make large new loans for the harvest

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season. The result of the advance sales to customers was that the next few months showed low
sales, and thus low cash coming in for the company. The company has barely been able to keep
current on its new loan repayments to its owner banks.

In your time as Director of Finance, you have made substantial changes to reduce the
company=s losses. You sold the company=s apartments to the workers who live in them.
Although getting those purchasers to make payments that they owe has been difficult, you
reduced the maintenance and repair expenses and the number of employees, because they now
work for the housing cooperative. You gave the company=s fire house and fire truck to the city,
which reduced that expense. You sold the company=s printing plant (built twelve years ago when
there had been an extra-large budget) to the workers in that plant, giving them a contract to print
the labels and boxes for the tomato sauce jars, boxes, and barrels. The cost of that contract to
you has been less than the cost of operating the printing plant and paying its workers. The
printing plant also prints labels for other factories in town now. But, in your opinion, you have
made all the changes of this type that you can identify. There are no more big, obvious changes
that would save cash for the company.

Over the past two years, a few people have expressed interest in buying the company or
substantially all of its assets. You have not followed up on these because they seemed very
preliminary and none of them really ever made an offer or pursued the question very hard. Some
of them you thought were just very insubstantial people who did not have the money or ability to
buy and run the plant. One person, for example, said the he was a broker for a Italian tomato
sauce company, but you did not believe that he really represented them. A local man who
recently became quite wealthy talked about making an offer, but he did not have any background
in the food industry and seemed to be seeking publicity by offering to save a large local
employer. You ignored him.

The current crisis arose because of the long term problems of high costs -- mainly labor --
and the price discounting that reduced the revenue of the company. This has been a recurrent
problem, but as you have taken steps to sell assets or reduce costs, you have stayed ahead of the
problem. Now, however, you expect to start showing regular deficits, and at next harvest season,
you expect to have another cash crisis like this most recent year. If you have to, you will
approach it the same way you did this year=s cash crisis, but you are not sure how long you can
continue doing this.

You have applied to the provincial office for a special AIndustrial Redevelopment Grant@
which you sought for modernization of the company=s management and marketing structure.
This may provide some additional cash, if the grant is given to the company.

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Interview Information for Francisco Ortiz

Background information for the person playing the role of Francisco Ortiz.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Francisco Ortiz

Job title: Owner

Corporation: Cafe Ortiz (a Fronteriza Restaurant)

You are the owner of a famous restaurant in Fronteriza. You are originally from Spain,
where you grew up in a family that owned a small restaurant. You attended Le Cordon Bleu and
graduated with a degree from the master chef and catering program. In Paris, you met and
married the daughter of the mayor of Fronteriza, which led you to move to Fronteriza. In
Panagra, you started your own restaurant. You are very proud of the fact that you just received a
12/20 rating from the Gault Millaut Restaurant Guide. This is a tremendous accomplishment as
you are the first restaurant to be rated in Panagra.

You cater to the most elite clientele in Fronteriza, serving classic Italian and Spanish
dishes. You serve two kinds of dishes in your restaurant involving tomato sauce. In the
evenings, you serve a milanesa a la napolitana garnished with Cordillera-style tomato sauce as
an appetizer. In addition, your restaurant is famous for its business lunches which consist of high
quality meals sold in a formal, yet congenial atmosphere. One of the most popular luncheon
dishes is a provoleta a la parrilla served with regular tomato sauce. Customers expect to find a
tomato sauce served with both dishes.

Recently, Fronteriza has gone through an industrial boom and businesses are now having
to entertain more and more visiting businessmen and women. You have been very successful at
attracting these business people to your restaurant, both for lunch and dinner. Because they have
such high expectations from your restaurant, you are particularly concerned about maintaining
the quality of your ingredients.

The tomato sauce you purchase is especially important to you. In particular, you are
always concerned about maintaining a supply of Cordillera-style tomato sauce. Before
Cordillera started selling in Panagra, you had to make special arrangements with food
wholesalers in Italy and Spain. Now, the situation is moderately better in that you have a

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relationship with Cordillera. Nevertheless, the representatives from Cordillera behave like
thieves with you because they know that you have no choice but to buy from them. In fact, if
you weren=t so busy, you probably would have already complained to the Competition Agency
about their practices.

As for the tomato sauce you buy for lunch, you have just switched from buying
Martucha=s tomato sauce to buying Sardinia=s. The reason for this is that the sales representative
you deal with just moved from Martucha to Sardinia. While you have always had a good
relationship with Martucha, you believe it is largely because of the work of your salesman. The
sales representative was actually an employee of Conglom before Conglom acquired Martucha
and is very different from most of the other tomato sauce salesmen. For instance, once when
Martucha mixed up orders and delivered you a thinner tomato sauce instead of the thicker sauce
you need, the representative personally drove up to Martucha to get a replacement order.

In general, you would only purchase tomato sauce from Martucha and Sardinia. Friends
of yours in the restaurant business have tried using Candaro and Sanfor and have had real
problems both with quality and the companies meeting delivery schedules. As far as you know
Candaro and Sanfor are equivalent in quality. In your opinion, besides Martucha, all Panagran
tomato sauce companies are the same.

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Interview Information for Pablo Houseman

Background information for the person playing the role of Pablo Houseman.

(You should answer questions using the following information as a basis. If asked, you should
provide the information in the answer, but do not try to volunteer information that has not been
asked for. For questions not covered by the information below, you can invent answers that are
generally consistent with the information below and the other facts of the hypothetical case.)

Name: Pablo Houseman

Job title: Owner

Firm: Euromarket (a grocery store in Costa Bonita, Panagra)

You are the owner of two upscale grocery stores that sell mostly imported goods. Before
opening your store, you worked as a sales representative for a Spanish food importer. You
opened the store five years ago and have since been very successful. You have since opened a
second store in Costa Bonita and are contemplating opening a third store in Fronteriza.

Your stores primarily sell top quality Panagran and imported foods. Most of your goods
are imported from Spain, France, and Italy. You sell a wide variety of smoked and cured meats,
asado, and cheeses. You also sell a large selection of tomato sauced products including:
premium tomato sauced tomatoes, Cordillera-style tomato sauce, tomato sauced onions, peppers,
mushrooms, capers, mixed vegetables and beets. Your customers tend to have above average
incomes.

Among the premium tomato sauced tomatoes, you sell both Sardinia and Martucha
brands. In both cases, you only carry the top of the line product. You were one of the first
purchasers of Sardinia tomato sauce, and you have had a relationship with them for over six
years now.

About three years ago, you were not carrying Martucha tomato sauce. Martucha
approached you and asked if you would be interested in carrying their tomato sauce under your
own label. After long consultation, you agreed to a deal where they sell you tomato sauce
meeting your strict criteria at a reduced rate and in return they can place a Euromarket label on
the jars. The terms of the agreement permit each party to opt out of the contract at the end of
five years. The Euromarket tomato sauce is only sold through your store.

You offer the Euromarket label as a cheaper alternative to Sardinia and have considerable
success marketing it. While in your opinion customers consider all of your tomato sauced

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products when making a decision about what to buy, you think that your customers are
beginning to recognize the Euromarket name and associate it with quality products.

At first you were concerned about Sardinia=s acquisition of Martucha. You were not sure
if Sardinia would want to continue your arrangement with Martucha. However, you have since
talked with Sardinia, and you now have an offer on the table to extend the agreement for another
ten years.

Also, you have been approached by officials at Sanfor, who are interested in selling their
tomato sauce under the Euromarket name. You are skeptical about doing so, since you do not
believe Sanfor has high enough quality tomato sauce. The tomatoes grown in the Sanfor area
tend not to be of the same quality as those grown in Martucha. Sanfor has assured you that they
can buy tomatoes in Martucha and truck them to their factory. However, you have not yet
discussed the costs of their premium tomato sauce and you suspect that Sanfor=s will be more
expensive because of the added transportation costs. Nevertheless, you plan to play Sanfor off
against Martucha in renegotiating the Euromarket brand agreement.

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