The preliminary examination of the pre-merger application submitted by Nestlé reveals that both parties operate in the same relevant geographic market, ie, in the nutrition business in Pakistan. The market comprises of two relevant products: Infant and Follow-On Milk (IFFO Milk) for babies aged 0-12 months; Growing-Up Milk (GUM) for children aged 12 months and above. Nestlé’s current share is 65.90% and 91.80% in the relevant product markets; while Pfizer has a share of 1.50% and 1.90% in the relevant product markets.
The market shares of the parties indicate that Nestlé is already a dominant player in the relevant product markets in Pakistan. With the proposed acquisition, Nestlé may strengthen its already dominant position, which may result in lessening of competition in the IFFO Milk and GUM markets of Pakistan by the removal of a competitor in the relevant markets.
The CCP has opened a second phase review of the proposed acquisition under Section 31(1)(d)(ii) of the Competition Act, 2010. The review will determine whether or not the 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 structures of the parties are to be examined in greater detail in the review.
The CCP has issued an order to Nestlé for the opening of the second phase review due to doubts as to the compatibility of the merger with Chapter II of the Competition Act.
Published in The Express Tribune, July 6th, 2012.
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