EU: Deodorant Merger Passes The Smell Test

Today, the European Commission conditionally cleared a $1.76 billion (1.2 billion euro) acquisition by Unilever, an Anglo-Dutch company, of the Sara Lee Corporation household and body care division.  The clearance required a divestiture of Sara Lee’s Sanex brand and other related business in Europe due to a concern about anticompetitiveness in certain deodorant markets. 

“We had to ensure that the transaction would not lead to increased prices for consumers,” said Joaquín Almunia, the EC Vice President of Competition Policy.  “As Unilever offered a strong and clear-cut remedy to address the competition concerns in a number of deodorant markets, the Commission was able to clear the merger.” 

The investigation into the potential merger lasted five months, and the EC noted that Unilever had a “particularly strong” position in the European deodorant market due to its Axe, Dove, and Rexona brands.  The EC was particularly concerned about the merger’s possible effects on deodorant markets in Belgium, the Netherlands, Denmark, Ireland, Spain, Portugal and the United Kingdom. 

The EC noted that the merger could “remove an important competitive force and would likely have led to price increases.”  Thus, the Commission concluded that the divestiture of the Sara Lee Sanex brand and related business in Europe “offers a clear and workable remedy, sufficient to restore competition in all markets where the Commission had concerns.”   Unilever employs 163,000 people worldwide and sells a range of products that includes cosmetics, food, tea, and other goods.  Sara Lee employs 33,000 people worldwide and sells products that include, among other things, packaged food products, shoe polish, deodorant, and other products.

The parties notified the Commission of the proposed merger on April 21, 2010, and the Commission opened an investigation into it on May 31, 2010.