The Competition Tribunal has approved the merger between Nestlé and Pfizer Nutrition subject to certain conditions.

This global transaction, which will see the largest and third-largest players in the South African infant milk formula market merge, will also result in only two major players remaining in the market, namely Nestlé and Aspen. This increases the likelihood of price increases.

To remedy the Tribunal's concerns, the merging parties suggested a divestiture of the infant milk formula business of Pfizer in South Africa to a proposed purchaser. In addition the Tribunal stipulated that Pfizer Nutrition's assets in South Africa, which include the sales personnel, contracts, inventory and real estate, be transferred to the proposed purchaser; and that Nestlé sell all advertising, marketing and promotional materials to the divested business.

In other jurisdictions, Nicaragua and Colombia are yet to issue their decision. According to news reports, the Mexican competition authority, after initially prohibiting the transaction, is now considering conditions similar to those suggested in South Africa.

Article first published on the Webber Wentzel website