The European Commission has approved the proposal of Philip Morris International (PMI) to acquire Swedish Match.
According to a statement on its website, the committee has found that Swedish Match has essentially monopolized the distribution of tobacco and nicotine products in Sweden through its subsidiary, SMD Logistics. The committee's initial investigation indicates that SMD Logistics holds a dominant position in the supply of combustible tobacco, smokeless tobacco, and related products in Sweden.
According to the committee, as SMD is the only distributor of combustible tobacco, smokeless tobacco, and related products in Sweden, this transaction could potentially impact Sweden's competitive landscape. However, the committee did not find any competition issues in other markets where both parties compete, such as the production and supply of snuff in Sweden and Norway and nicotine pouches in Sweden and Slovenia, as there are sufficient alternative suppliers to maintain a competitive market after the transaction.
To overcome preliminary competition concerns, PMI has proposed divesting the logistics division of Swedish Match, called SMD Logistics. These commitments include a structural divestment of the standalone business, completely eliminating vertical links between tobacco and nicotine product manufacturing and distribution in Sweden. This will enable purchasers to operate the divested business as a viable competitive force on a sustainable basis in the market.
The committee stated that it will closely monitor the process of divestment, including the selection of suitable buyers for the divested business, which must receive approval from the committee. After market testing, the committee concluded that the modified transaction, with the commitments made, will no longer raise competition concerns.
Earlier, the acquisition proposal from PMI received approval from authorities in the United States and Brazil.
Jacek Olczak, CEO of PMI, stated in a press release, "We are pleased to have obtained all necessary regulatory approvals and believe that our revised offer for Swedish Match provides significant value for both Swedish Match and PMI shareholders, representing the best and final price.
The revised prices retain 90% of acceptance conditions, which is crucial for maximizing the potential of our portfolio. In case the prices fail, we are prepared to independently develop IQOS and other smokeless products available in the US.
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