Competition Tribunal to hear Nestlé/Aspen deal - CNBC Africa

Competition Tribunal to hear Nestlé/Aspen deal

Southern Africa

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Baby milk. PHOTO: Getty Images

In April 2012, Nestlé agreed to acquire Pfizer Nutrition for 11.85 billion US dollars to enhance its position in global infant nutrition.

The Tribunal then approved the South African leg of the global merger between the two companies in February 2012.

Because the merger would see the removal of competition between two significantly strong baby milk brands, one of the conditions the Tribunal imposed on the merger was that Nestlé had to licence out Pfizer’s baby milk products to another company for a limited period. This would be and under various terms and conditions.

Nestlé chose Aspen as the appropriate licensee to continue producing and marketing the Pfizer baby milk brands.

“The Commission, which assesses 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. [Instead it] would restore the competition lost in the South African baby milk market following the Nestlé/Pfizer deal,” the commission said in a statement.

The Tribunal will hear this case throughout next week and is expecting to hear testimony from 17 witnesses and a representative of the Commission, who will address the Tribunal on the impact of this deal on the market.

The witnesses include Aspen CEO Stephen Saad, representatives from retailers of baby milk, including Pick ‘n Pay and Clicks, as well as local and global producers of baby milk.

“Nestlé’s decision to select Aspen as the licensee is primarily based on Aspen being prepared to acquire both the South African and Australian IMF [infant milk formula] business of Pfizer, while also making the highest monetary bid and complying with the Tribunal’s order of 11 February 2013.”, the Commission said in its recommendation report.