MEXICO CITY—Mexico’s antitrust commission said on Monday that it accepted a proposal by Nestlé SA to sell the Pfizer Inc. PFE -0.15% infant-formula business in Mexico to an unrelated third party to maintain competitive conditions in the market for formula.
Nestlé outbid Groupe Danone SA BN.FR +0.02% in April 2012 to buy Pfizer’s global infant-nutrition business for $11.85 billion, and closed the deal in December of last year. But Mexico’s Federal Competition Commission, or CFC, rejected the acquisition in November on grounds that it would give the Swiss food giant too big a share of the domestic market for baby formula, allowing it to raise prices.
Nestlé representatives couldn’t immediately be reached for comment on Monday.
The commission said it had accepted a proposal by Nestlé to sell Pfizer’s formula business in Mexico to guarantee that Pfizer’s formula brands remain as an «independent and viable» competitor in the Mexican market. The assets to be sold include Pfizer’s formula plant and exclusive brand licenses, the commission said.
Limited information made public by the commission suggests that the retail value of the baby-formula market in Mexico is around $1.4 billion, although the CFC said it had no exact data on the size of the market.
In rejecting the acquisition in Mexico last year, the CFC determined that the Pfizer infant-formula business would have given Nestlé 71% of the domestic market in stage-one and stage-two formula for infants up to 12 months, and 88% of the market for stage-three formula for toddlers one to three years old. The commission estimated that would have allowed Nestlé to raise prices of its different brands between 2.9% and 11.5%, while giving competitors room to raise their own prices to a lesser extent.
The CFC said Pfizer’s prenatal and maternal nutritional complements, such as vitamins, weren’t part of its investigation, since Nestlé had no presence in that market.
Mexico was among a number of countries that placed conditions on Nestlé’s acquisition of the Pfizer business. Australia’s Competition and Consumer Commission approved the deal after Nestlé agreed to license Pfizer’s infant nutrition brands to an independent buyer.
Source: Â The Wall Street Journal