Nestle will sell Pfizer’s Mexican business to settle competition issues in the market arising from its deal last year to buy the pharmaceutical giant’s infant nutrition operations worldwide.
The Mexican competition authority, the FCC, said yesterday (15 April) Nestle had offered to sell the Pfizer business in Mexico to a third party. The sale will include Pfizer’s manufacturing facility in the country, its Mexican sales force and an exclusive licence to use Pfizer brands in the market. The licence must be valid for at least ten years and Nestle is prohibited from using the Pfizer brands in Mexico for at least 20 years.
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The move will address a “real and substantial risk” the proposed acquisition would have impeded “free competition” in the Mexican infant formula market, the FCC said.
“The [acquisition] would have led Nestle to accumulate a market share of 71%-88% of the volume sold in the market of routine infant formula for babies between zero and 36 months,” the competition watchdog observed.
The increased share would, the regulator argued, would have opened the door to arbitrary price increases.
Responding to the news, Nestle said it was satisfied with the deal. “We are pleased to have reached this agreement with the authorities in Mexico,” a spokesperson said.
The spokesperson declined to comment further on the regulatory process in the country or how it would proceed with a sale. Reports have suggested the firm has already engaged Rothschild to help the company sell Latin American assets valued at more than $1bn.
