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The competition and Markets Authority of UK has temporarily blocked the potential purchase of the K-Y Jelly brand by Reckitt Benckiser (RB) from Johnson & Johnson, saying that the price of sexual lubricant could slip to new highs.
According to the watchdog, RB already has the Durex brand with it and adding the lubricant as well will lead to monopoly in the market segment, which could turn the prices higher. Johnson & Johnson agreed to sell the K-Y brand to RB in March 2014, but it now faces resistance after the CMA claimed that all these companies together cover three quarters of the market.
The regulator commission noted that there seems to be enough of an overlap in the market for personal lubricants for there to be a realistic prospect of consumers facing less competition and possibly higher prices if the 2 biggest brands come under single ownership. The CMA has slapped a notice of eight weeks to come up with a solution that satisfies all parties.
K-Y Jelly was first sold under prescription in 1917, but has been available over the counter since 1980. It is sold in over 50 countries, with the US, Canada and Brazil accounting for the majority of its sales. Analysts think the business is worth $400m, four times K-Y’s annual sales, although the price tag was never revealed. If the CMA upholds its current reservations, it could ban Reckitt Benckiser from taking over the K-Y business in the UK.
According to the watchdog, RB already has the Durex brand with it and adding the lubricant as well will lead to monopoly in the market segment, which could turn the prices higher. Johnson & Johnson agreed to sell the K-Y brand to RB in March 2014, but it now faces resistance after the CMA claimed that all these companies together cover three quarters of the market.
The regulator commission noted that there seems to be enough of an overlap in the market for personal lubricants for there to be a realistic prospect of consumers facing less competition and possibly higher prices if the 2 biggest brands come under single ownership. The CMA has slapped a notice of eight weeks to come up with a solution that satisfies all parties.
K-Y Jelly was first sold under prescription in 1917, but has been available over the counter since 1980. It is sold in over 50 countries, with the US, Canada and Brazil accounting for the majority of its sales. Analysts think the business is worth $400m, four times K-Y’s annual sales, although the price tag was never revealed. If the CMA upholds its current reservations, it could ban Reckitt Benckiser from taking over the K-Y business in the UK.
