Pharmacy Daily | Infant nutrition take-over

NESTLE has been given the green light by the Australian Competition and Consumer Commission to acquire rival global infant nutrition company, Pfizer Nutrition. In Australia Nestle supplies infant formula and toddler milk under the brands NAN and Lactogen, whilst Pfizer Nutrition supplies S-26 and SMA. Stipulations placed on the purchase by the ACCC will require Nestlé to create a third major supplier of infant formula and toddler milk in Australia, via the licensing of Pfizer Nutrition’s Australian infant nutrition business’ brand portfolio to an independent purchaser to be approved by the ACCC. This court enforceable order is aimed at ensuring that the current level of competition in the country remains, and requires Nestlé to sell an exclusive ten year license for Pfizer Nutrition’s infant nutrition S-26/SMA brand portfolio in Australia, followed by a further ten year ‘black out’ period in which Nestlé would not be permitted to re-enter the markets with Pfizer’s brands. Meanwhile, the approved purchaser will need to have the necessary assets (including intellectual property), rights and agreements to allow it to operate the divestiture business as a viable going concern to compete effectively in the relevant markets. The approval follows an extensive consultation by the ACCC to clear up concerns over market monopoly and decreased competition. “The ACCC had significant concerns that without the undertaking, the proposed acquisition would further increase concentration in already concentrated markets, where barriers to entry and expansion are high,” ACCC Chairman Rod Sims said. “If the proposed acquisition were to proceed in Australia, the number of major suppliers of infant formula and toddler milk in each of the distribution channels would be reduced from three to two, and our inquiries indicated that this would be likely to substantially lessen competition in the supply of infant formula and toddler milk,” Sims added. According to the ACCC the undertaking is designed to provide the means for an approved purchaser to successfully transition and re-brand the S-26/SMA brand portfolio to their own proprietary brand over a number of years and also have the opportunity to build brand equity of the re-branded products during the ‘black out’ period.

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