Media Releases

Commerce Commission declines Reckitt Benckiser lubricant merger

24 April 2015

The Commerce Commission has declined an application from Reckitt Benckiser Group, owners of Durex, to purchase Johnson & Johnson’s K-Y brand and product assets.

The Commission is not satisfied that the merger of Durex and K-Y would not have the likely effect of substantially lessening competition in the supply of personal lubricants to New Zealand supermarkets and pharmacies.

Commission Chairman Dr Mark Berry said that although the merger had been approved in other countries, New Zealand’s market was unique due to the limited number of suppliers to main retailers. Durex and K-Y are the leading personal lubricant brands in New Zealand and enjoy strong customer loyalty.

“Together Durex and K-Y account for the vast bulk of supermarket and pharmacy sales. While Reckitt Benckiser submitted that the two brands appeal to different customers, Durex and K-Y are each other’s closest rivals across the full product range and competition between them is the main constraint on wholesale prices,” Dr Berry said.

“We also aren’t convinced that any of the other brands stocked in supermarkets or pharmacies, such as Ansell, Sylk or FlowMotion, would be able to replace the competition lost between Durex and K-Y. Nor are we satisfied that supermarkets, in particular, have the incentive to support the expansion of an existing supplier or take action if the merged brands raised prices, as the personal lubricant category is small and does not drive foot-traffic through the supermarkets.

“In our view, we could not exclude the real chance that as a result of this merger Durex and K-Y’s wholesale prices would increase.”

The Commission did not have concerns about competition in the adult and online retail markets, where there is greater variety of lubricant brands available to consumers.

A public version of the written reasons for the decision will be available shortly on the Clearances Register.

Background

Reckitt Benckiser is a global consumer goods company that manufactures and sells a range of health, hygiene, home food and pharmaceutical products. Its products include the Durex range of personal lubricants.

Johnson & Johnson is a global medical devices, pharmaceutical and consumer goods company. It produces consumer goods under 48 brands, including the K-Y brand of personal lubricants.