12th Aug 2015 09:02
LONDON (Alliance News) - The UK's competition regulator has found that consumer goods company Reckitt Benckiser Group PLC's acquisition of the K-Y personal lubricants brand could lead to a lessening of competition in competition and will force Reckitt to licence the K-Y brand to a UK competitor for eight years.
The final report from the Competition and Markets Authority backs the provisional findings it published back in May, when it said Reckitt's acquisition of the brand from US healthcare giant Johnson & Johnson, agreed in March 2014, to be merged with its existing Durex brand, would lead to a substantial reduction in competition in the personal lubricants market, potentially through higher prices, meaning customers buying the products would be worse off.
The CMA said K-Y and Durex control nearly three-quarters of the personal lubricants market in supermarkets and national pharmacies, where the majority of customers purchase the products. The regulator said there is little evidence to suggest that other outlets, including specialist shops or online retailers, would be able to exert sufficient pressure to stop price rises in supermarkets and national pharmacy chains.
In order to remedy the issues the CMA has outlined, it said Reckitt will be required to licence the K-Y brand to a UK competitor for eight years, allowing enough time for it develop a new brand to rival the Durex range which could then gain access to supermarkets and pharmacies.
"To preserve the benefits of competition in this market we have concluded that an effective and proportionate remedy is to require Reckitt to license the K-Y brand in the UK to a competitor for eight years. During this period the licence will give a competitor an existing platform from which it can develop a new brand to rival the Durex range. The licence will also facilitate that new brand in gaining access to supermarkets and national pharmacy chains to protect competition," said Phil Evans, the chair of the CMA's inquiry group on the case.
Shares in Reckitt were down 3.0% to 5,943.34 pence on Wednesday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
RB..L