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Lube company merger receiving second 'in-depth' probe
Durex, KY union leaving smaller players without any action - CMA
Frustrated after its initial probe into a merger between two lube companies, the UK's Competition Markets Authority wants to push deeper into the decision of the makers of Durex and K-Y to jump into bed together.
The two companies agreed to make the corporate entity with one back on 10 March 2014 after Durex maker Reckitt Benckiser (RB) confirmed the purchase of the K-Y brand from Johnson & Johnson (J&J).
But the CMA has found that, as a result of the transaction, the merged company would become the largest supplier of personal lubricants to grocery retailers and national pharmacy chains in the UK.
Such a move will mean other lube brands will fail to get any market action.
"The CMA has therefore decided to refer the merger for an in-depth phase 2 investigation," said the market regulator.
It follows a December recommendation from the CMA to refer the merger for a full investigation "unless the parties offered acceptable undertakings to address its concerns around the supply of personal lubricants".
Reckitt Benckiser offered undertakings intended to address the concerns identified but "after careful consideration the CMA was not confident that these would resolve the concerns in a clear-cut manner", it said.
Sheldon Mills, CMA director of mergers, said: "Durex and K-Y are two very well-known personal lubricant brands. While these personal lubricants are differentiated to an extent, we found that retailers and consumers perceive them as competitors and, in a significant number of instances, they are the only brands offered by grocery retailers or national pharmacy chains."
A decision on the merger will be made by a group of independent panel members supported by a case team of CMA staff. ®