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The Competition Tribunal is next week set to hear a case relating to the proposed acquisition of Pfizer Nutrition’s baby milk range of products by Aspen Nutritionals and will hear testimony from 17 witnesses, as well as a representative of the Competition Commission, on the possible impact of this deal on the market.
This followed a recent recommendation by the commission that the tribunal approve the acquisition without conditions, stating that the transaction was unlikely to significantly lessen competition in the baby milk market.
According to the commission, as Aspen had committed not to consolidate its Infacare baby milk brand with Pfizer’s baby milk brands, consumers were unlikely to be affected by the deal, as they would still choose between the existing Pfizer brands and the Aspen brands on the shop floor.
The commission’s research showed that consumers tended to select baby milk based on the brand, rather than which company owned the brand.
The commission’s recommendation came after the tribunal approved the South African leg of the global merger between Nestlé and Pfizer in February.
As that deal was set to eliminate competition between two baby milk brands, which could have disadvantaged consumers, one of the conditions the tribunal imposed on the deal was that Nestlé licenSe out Pfizer’s baby milk products to another company for a limited period and under various terms and conditions.
This company would be obliged to maintain competition between the existing Nestlé and Pfizer brands in the market.
A similar set of conditions were imposed by several international competition agencies, including the Australian and Mexican authorities.
Following a tender process, Nestlé selected Aspen as the appropriate licensee to continue producing and marketing the Pfizer baby milk brands.
The commission, which assessed large mergers prior to referring them to the tribunal for decision, considered Nestlé’s choice and concluded that Aspen’s acquisition of Pfizer’s baby milk range was unlikely to substantially lessen competition in the baby milk market, but would instead restore the competition lost in the South African baby milk market following the Nestlé Pfizer deal.
“Nestlé’s decision to select Aspen as the licensee is primarily based on Aspen being prepared to acquire both the South African and Australian infant milk formula business of Pfizer, while also making the highest monetary bid and complying with the tribunal’s order,” the commission said in its recommendation report.