U.K.'s CMA still weighing in on RB acquisition of K-Y

LONDON - The United Kingdom's Competition and Markets Authority may put a kink into Reckitt Benckiser's acquisition of the K-Y personal lubricant brand from Johnson & Johnson, at least in the U.K., as the regulatory authority on Friday provisionally found that Reckitt Benckiser’s anticipated acquisition of the K-Y brand could lead to higher prices for personal lubricants.

 

The deal was initially announced in March, 2014, and was expected to give Reckitt Benckiser a strong brand positioning on shelf with its Durex intimacy health portfolio and the K-Y personal lubricants.  In the U.S., sales of K-Y personal lubricants dominate the category with six SKUs ranking in top 10 brand sales. Across total U.S. multi-outlet, 2014 sales of personal lubricants totaled $215.1 million, up 2.1%, according to IRI. 

 

The deal had been completed in the North America markets by July, 2014.

 

The Competition and Markets Authority had referred the case for a phase 2 investigation in January 2015 and the inquiry group of independent CMA panel members looking at the merger has examined the companies’ internal documents, the views of competitors and retailers, sales and price data and the results of a customer survey.

 

"After considering the full range of this evidence, the group provisionally believes that on balance the merger could lead to a substantial reduction in competition, possibly through higher prices, making customers buying these products in grocery retailers and national pharmacy chains worse off," CMA stated. "K-Y and Durex hold almost three quarters of the market share in supermarkets and national pharmacies, where the majority of customers buy these products. Whilst customers can choose from a wide range of products and suppliers in specialist shops or when buying online, there is little evidence that these other outlets will act as a brake on any price rises in national chains, and smaller suppliers have historically had little success getting access to the shelves in these larger shops."

 

The CMA is inviting responses to these provisional findings and will continue to assess all the evidence before the agnecy makes its final decision.