Tribunal approves baby milk deal

OUTCOME OF COMPETITION TRIBUNAL HEARINGS - 19 December 2013

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Competition Tribunal approves baby milk deal

Today the Competition Tribunal approved the large merger between Aspen Nutritionals, a division of Pharmacare Ltd, and the South African infant nutrition business of Pfizer Nutrition. The Tribunal approved the deal, without conditions, given a lack of sufficient evidence of the proposed transaction substantially preventing or lessening competition in various baby milk markets in South Africa.

This decision follows a week long hearing in which the Tribunal heard 14 witnesses on the impact of the merger on the South African baby milk market. Most of these witnesses were called in terms of a directive of the Tribunal. The Tribunal will issue its reasons for this decision in due course.

Background

On 8 August 2013 the Competition Commission recommended that the Tribunal approve, without conditions, Aspen Nutritionals’ acquisition of Pfizer Nutrition’s baby milk range of products saying the transaction was unlikely to significantly lessen competition in the market for baby milk.

However, on 23 August 2013 the Tribunal referred the matter back to the Commission for further investigation and analysis of certain aspects, including the effect of the proposed deal on potential (future) competition. Following this further analysis the Commission came to the same conclusion and made the same recommendation, i.e. an unconditional approval of the proposed transaction.

The Commission’s recommendation came after the Tribunal approved, in February 2013, the South African leg of the global merger between Nestlé and Pfizer. As that deal was likely to substantially prevent or lessen competition the Tribunal imposed a remedy on the Nestlé / Pfizer deal in terms of which Nestlé had to licence out Pfizer’s baby milk products to another company for a limited period and under various terms and conditions. Amongst other things, this company would be obliged to maintain competition between the existing Nestlé and Pfizer brands in the market. A similar set of conditions was imposed by other international competition agencies including the Australian and Mexican authorities.

The Tribunal heard this case from 09 to 13 December 2013 and heard testimony from 14 witnesses and a representative of the Commission. They addressed the Tribunal on the characteristics of and the potential impact of this deal on the baby milk market in South Africa. The witness list included a dietician, a registered nurse/midwife, representatives from retailers of baby milk: Pick ‘n Pay, Spar and Clicks,  Abbott, a local supplier of certain baby milk products and Tiger Brands, as well as Aspen’s CEO: Stephen Saad and representatives of both Pfizer and Nestle.

Issued By:    

Nandi Mokoena
Communications: Competition Tribunal
Cell: +27 (0) 82 399 1328
E-mail: NandisileM@live.co.za or NandiM@comptrib.co.za

On Behalf Of:

Lerato Motaung
Registrar: Competition Tribunal
Tel: (012) 394 3355
Cell: +27 (0) 82 556 3221
E-Mail: LeratoM@comptrib.co.za