22nd May 2015 06:30
LONDON (Alliance News) - The UK's Competition and Markets Authority Friday said its provisional findings on the acquisition of the K-Y brand by Reckitt Benckiser Group PLC has found that the deal may result in higher prices for consumers.
FTSE 100-listed Reckitt reached an agreement in March 2014 to buy the K-Y personal lubricants brand from US healthcare company Johnson & Johnson and the acquisition was referred for a phase 2 investigation in January 2015 to examine the impact of the deal for consumers.
The CMA, the UK's antitrust regulator, said that after considering the evidence put forward, its provision findings on the deal is that the merger will 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.
KY and Reckitt's existing Durex brand hold nearly three quarters of the market share in supermarkets and national pharmacies, the CMA said, and while consumers can select from wide range of products when buying in a specialist retailer or online, there is little evidence these other outlets will be able to offset the impact of the acquisition.
"Consumers and retailers differentiate between these two products to some extent. However, on balance, there seems to be enough of an overlap in the market for personal lubricants for there to be a realistic prospect of consumers facing less competition and possibly higher prices if the two biggest brands come under single ownership," said Phil Evans, the chairman of the CMA's inquiry panel.
"We are now inviting responses to these provisional findings and will continue to assess all the evidence before we make our final decision," Evans added.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
RB..L