South Africa’s Competition Commission will recommend that the Competition Tribunal approve the South African leg of Nestle’s global acquisition of Pfizer Nutrition, with a number of conditions, at a hearing tomorrow (6 February).

Warning that the Nestle-Pfizer entity would control a significant proportion of the infant nutrition market, the Competition Commission suggested this could allow the firm to increase baby formula prices. The Commission – South Africa’s investigation and enforcement body – also argued that the merger could potentially raise a number of other competition concerns.

In order to remedy this situation, the Commission proposed a “transitional re-branding remedy” lasting two consecutive ten-year periods.

“During [this] time Nestle will license out the existing Pfizer products for sale under different brand names to an independent licensee. After the 20 year period, Nestle may re-introduce the Pfizer brands with their original branding into the market,” the Commission suggested.

These recommendations will now go before the Competition Tribunal, the country’s adjudicative body, which will rule on whether the proposed merger can go ahead and what provisions must be attached to the deal.

According to Nestle and Pfizer Nutrition, the merger proposal has been filed in 15 countries worldwide. In ten of these, it has been cleared. Nicaragua and Colombia are yet to issue a decision, while the Australian competition authority has attached a number of conditions to the merger. However Mexico’s competition watchdog has blocked the deal and rejected re-branding remedies, requiring the sale of Pfizer brands in the market.

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By GlobalData

A spokesperson for Nestle told just-food: “We do not wish to comment on this matter, as the South African Competition tribunal process is still underway.”