By Robb M. Stewart
MELBOURNE--Australia's antitrust regulator has attached a
condition to its approval of Nestle SA's (NESN.VX) proposed US$11.9
billion acquisition of Pfizer Inc.'s (PFE) infant nutrition
business, requiring it to license the brand portfolio in Australia
to an approved independent purchaser.
The Australian Competition and Consumer Commission in a
statement Thursday said it wouldn't oppose the deal after accepting
an enforceable undertaking from the companies.
Nestle and Pfizer Australia are two of the three largest
suppliers of infant formula and toddler milk in Australia and the
commission said it had concerns the planned takeover would increase
concentration in the market where barriers to entry and expansion
are high.
"Our inquiries indicated that this would be likely to
substantially lessen competition" without the undertaking to
license Pfizer's Australian infant nutrition brands, said Rod Sims,
chairman of the ACCC.
Mr. Sims said the undertaking is court enforceable and is aimed
at ensuring the current level of competition in the market is
maintained through the creation of a third major supplier of
formula and toddler milk.
The agreement requires Nestle to sell an exclusive 10-year
license for Pfizer's S-26 and SMA brands, followed by a further
10-year "black out" period in which Nestle won't be allowed to
re-enter the market with Pfizer's brands.
"The ACCC decided that a permanent divesture of the brands would
not be required and that the licence and rebranding remedy proposed
by Nestle appropriately addresses the primary competition concerns
and is likely to create an effective, independent and long-term
competitor to the merged entity," Mr. Sims said.
Nestle beat off rivals including Danone SA (BN.FR) to secure a
deal for Pfizer's business in April, although approval from anti
trust bodies in several countries is necessary. The Chinese
Ministry of Commerce early this month approved the acquisition,
while Mexico's Federal Competition Commission this week said it had
voted to reject the deal and had given the companies 30 working
days to appeal.
Write to Robb M. Stewart at robb.stewart@wsj.com
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