Commerce Commission faces slippery questions in X-rated inquiry
By Pattrick Smellie
June 11 (BusinessDesk) - Consenting adults they may be at the Commerce Commission, since they give consent to merger and
acquisition proposals as long as they don't harm competition.
But rarely has this normally straight-laced organ of state been asked to handle as slippery a problem as the proposed
acquisition of Johnson & Johnson's KY jelly brand of personal lubricant by Reckitt Benckiser, owners of the Durex range of adult lubricants.
Such is the greasy pole of competitive retailing, however, it seems the commission will need to consider dominance
issues that could arise if the makers of the Durex range, described as being "positioned at the playful or adventurous
end of the spectrum", were also to own the KY range, which Reckitt says is positioned at the "basic reassurance or
medical end of the spectrum."
"Reckitt Benckiser states that personal lubricant products are differentiated by reference to a range of factors,
including base ingredient (e.g., water or silicone based), functional attributes, end-use, flavour and target customer
base," says the commission statement of preliminary issues. "While most suppliers of personal lubricants produce a range
of differentiated lubricant products, Reckitt Benckiser submits that there is substitutability along the spectrum such
that they fall within a single New Zealand market for the supply of personal lubricants."
And while supermarkets only stock three lubricant brands, the two under consideration and Ansell, "pharmacies, adult
retailers and online shops stock a wider range of personal lubricant brands" and that sex shop and online sales are
growing, with customers able to swap smoothly between various options.
"Reckitt Benckiser submits that, post-acquisition, many strong and effective existing competitors would remain and could
easily expand," the summary says.
Tragically for the commission and hilariously for juvenile news reports of this potential source of competitive
friction, the four page statement of preliminary issues also proposes to "assess the horizontal effects that might arise
as a result of this acquisition."
A decision is expected by July 17.
(BusinessDesk)