Merger Update

The OFT today accepted undertakings from Unilever in relation to its completed acquisition of hair and personal care products manufacturer, the Alberto Culver Company. The merger will therefore not be referred to the Competition Commission.

The OFT's investigation concluded that the acquisition would or may have given rise to a substantial lessening of competition in respect of bar soaps in the UK resulting from the loss of a strong competitive constraint on Unilever's Dove brand. To address this concern, the undertakings offered by Unilever require it to divest the bar soaps business of Alberto Culver that includes the Cidal, Wright's and Simple brands.

Unilever offered to find an 'upfront' buyer for the divestment and has done so successfully within the OFT's required timescales. The agreed purchaser is Lornamead.

While the Cidal and Wright's brands are to be sold outright, the divestment of the Simple brand for bar soaps is to be effected by a perpetual and royalty-free licence covering the UK, Ireland and the Channel Islands.

The acceptance of the undertakings follows a public consultation, including on the identity of the 'upfront buyer', following which the OFT remains confident that the undertakings address its competition concerns in a clear cut manner.

Ali Nikpay, OFT Senior Director and Decision Maker in this case, said:

'Following a consultation, and having carefully assessed the financial position and commitment of the purchaser, Lornamead, we are satisfied that this divestment will ensure there continues to be effective competition in this market.'

NOTES

1. The Reference Test - The OFT has a duty to make a reference to the Competition Commission if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted or may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. Undertakings in lieu of reference - under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference to the Competition Commission, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate.

4. Undertakings in lieu of reference are appropriate only where the remedies proposed to address any competition concerns raised by the merger are clear cut. Furthermore, those remedies must be capable of ready implementation.

5. Up-front buyer requirement - the OFT considered in this case that a necessary precursor to accepting undertakings in lieu is that the divestiture should be agreed up-front to a suitable buyer approved by the OFT. This means that the OFT consults publicly on the suitability of the proposed buyer, as well as all other aspects of the draft undertakings, during the public consultation period.

6. Lornamead is a global personal care company with a portfolio of more than 36 brands including 'Vosene', 'Witch' and 'Rapid White'. The management team has significant experience in this sector and has established supply relationships with UK retailers. The acquisition of the Alberto Culver brands is in line with its overall business strategy. Based on the financial data presented and its future plans for the brands, the OFT is satisfied that Lornamead meets the criteria to be approved as a purchaser of the Alberto Culver bar soaps business.

7. The undertakings will come into effect from today.

8. The full text of this decision and a copy of the agreed undertakings will appear in the mergers section of this website at a later date.

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