Deals and IPOs

Reckitt Benckiser in sticky situation over lube deal


Durex condom-maker Reckitt Benckiser's planned purchase of a leading personal lubricant has come under scrutiny by a competition authority over concerns that the deal could mean a rise in prices.

Britain's Reckitt Benckiser – which is also behind consumer brands including Vanish, Dettol and Nurofen -- agreed to buy the K-Y brand from Johnson & Johnson in March last year.

Chris Ratcliffe | Bloomberg | Getty Images

But the U.K.'s Competition and Markets Authority said on Friday that it had provisionally found that the deal could lead to higher prices.

"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," the watchdog said in a release.

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Between them, K-Y and Durex have almost three quarters of the market share in supermarkets and national pharmacy chains – where the majority of lubes are bought, the watchdog said.

It added that although customers can opt for different brands in specialist shops or online, "there is little evidence that these other outlets will act as a brake on any price rises in national chains."

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The watchdog has invited responses to its provisional findings, and will publish its final decision by 18 August, 2015.

In a statement, Reckitt Benckiser said it would "engage cooperatively and proactively with the CMA in the UK whilst seeking to find a solution to the concerns" of the watchdog. In the meantime, the company said it was "confident that the acquisition of K-Y by RB would be for the benefit of consumers in the UK".