If approved in South Africa, the merged company would hold a significant share of the country’s infant formula market. The Competition Commission is concerned that the price of infant formula could increase in the country as a result.
It has recommended that the Competition Tribunal approves the acquisition, but only under the condition that Nestlé re-brands Pfizer Nutrition infant formula products for a total of 20 years.
It has also recommended that these re-branded infant formula products are licenced to a third party for the period.
“Alleviate” potential competition concerns
"In order to alleviate the potential competition concerns without compelling the new merged company to sell of the existing Pfizer brands of infant formula, the Competition Commission has recommended a transitional re-branding remedy lasting two consecutive 10-year periods during which time Nestlé will licence out the existing Pfizer products for sale under different brand names to an independent licensee.”
“After the 20 year period, Nestlé may re-introduce the Pfizer brand with their original branding into the market. The Competition Commission is of the view that this transitional re-branding remedy has benefits which a permanent divestiture lacks and which outweigh the inherent risks normally associated with re-branding.”
The Competition Commission added that rival infant formula manufacturers in the country have indicated that the proposed acquisition could raise “serious competition concerns.”
The Competition Tribunal hearing in regards to the deal took place earlier today.
Closed, but awaiting approval
The deal was filed in a total of 15 countries and has so far been cleared in a total of 10, including China, India, Brazil and Ireland. Australian authorities also approved the transaction, but with conditions.
The Mexican Federal Competition Commission (CFC) is the only authority to prohibit the transaction so far.
Despite awaiting regulatory approval from a number of countries, the $11.85bn deal was completed in December 2012 after it was approved by the “majority of markets involved.”
A spokesperson for Nestlé told DairyReporter.com at the time, that the deal had been approved in more than 85% of the markets Pfizer Nutrition operates in – allowing its closure under the terms of the April 2012 acquisition agreement.