The Mexican Federal Competition Commission (CFC) revealed in a statement yesterday that it had “voted unanimously” to accept Nestlé’s proposal, which was issued to the Mexico City-based anti-trust body by Nestlé following its refusal to authorise the deal in November 2012.
Under the terms of the CFC approval, Nestlé will sell off Pfizer infant formula business in Mexico to a third party “within short notice.”
Vevey, Switzerland-based Nestlé has welcomed the CFC decision, but declined to provide any further details of the agreement.
“We are pleased to have reached this agreement with the authorities in Mexico,” a Nestlé spokesperson told DairyReporter.com.
“We have no further comment to make,” the spokesperson added.
“All assets necessary to maintain a presence”
The accepted proposal involves the sale of Pfizer Nutrition’s Mexican business to a third party “unconnected with Pfizer or Nestlé.”
According to the CFC, the sale will involve “all assets necessary to maintain a presence” in the Mexican infant nutrition market – including Pfizer’s infant formula manufacturing facility and its sales force in the country.
The buyer will also be provided with an exclusive license to manufacture existing Pfizer Nutrition brands in Mexico.
Any potential buyer must also be approved by the CFC “to avoid risks to the process of competition and free concurrence.”
Infant formula unit price increase
The CFC initially declined to authorise Nestlé’s acquisition of Pfizer Nutrition in November 2012 over concerns that it would give the Swizz food and beverage manufacturer too high a share of the domestic infant nutrition market.
According to the CFC, the deal would see Nestlé’s share of the Mexican infant and follow-on formula market increase to around 70%, and its share of the toddler milk market increase to around 88% - positioning Nestlé to increase unit prices by up to 11.5%.
Despite the CFC’s initial rejection, the deal was completed in December 2012 after anti-trust authorities in the majority of the markets involved gave it their blessing.