The Competition Commission of Pakistan (CCP) in concluding the first phase review of the pre-merger application for the acquisition of the nutrition business of Pfizer Inc, by Nestle S.A. has ordered to open a second phase review, a press release issued on Thursday said.
The preliminary examination of the pre-merger application submitted by Nestle S.A. reveals that both parties operate in the same relevant geographic market ie, in the nutrition business in Pakistan comprising of two relevant products: i) Infant and Follow-On Milk (IFFO Milk) for babies aged 0-12 months and ii) Growing-Up Milk (GUM) for children aged 12 months and above, where Nestlé's current market share is at 65.90 percent and 91.80 percent in the relevant product markets while Pfizer has a current market share at 1.50 percent and 1.90 percent in the relevant product markets.
The market shares of the parties show that Nestlé is already a dominant player in the relevant product markets in Pakistan and with the proposed acquisition; Nestlé may strengthen its already existing dominant position which may also result in lessening of competition in the IFFO Milk and GUM markets of Pakistan by the removal of a competitor in the relevant markets.
CCP has opened a second phase review of the proposed acquisition under Section 31(1)(d)(ii) of the Competition Act, 2010 in order to determine whether or not the said acquisition is likely to substantially lessen competition by creating or strengthening a dominant position by Nestlé in the nutrition business in Pakistan in the two major product markets defined above, the current and future market structure of the parties are to be examined in more detail. CCP has issued an order to Nestlé for the opening of the second phase review due to the doubts arisen as to the compatibility of the merger with Chapter II of the Act, the press release said.-PR
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