GlaxoSmithKline Plc & Novartis Consumer Health Australasia Pty Limited - s.87B undertaking

Company or individual details

  • GlaxoSmithKline Plc & Novartis Consumer Health Australasia Pty Limited
    46 004 535 513

Undertaking

On 17 December 2014 the ACCC accepted an undertaking (the Undertaking) given by GlaxoSmithKline Plc (GSK) and Novartis Consumer Health Australasia Pty Ltd in relation to Novartis AG (Novartis) and GSK’s proposal to merge their global consumer healthcare businesses. The parties propose to form a new joint venture company called GSK Consumer Healthcare (GSKHC). GSK proposes to acquire 63.5% of the shares in GSKHC and Novartis proposes to acquire 36.5% of GSKHC shares (proposed acquisition).

GSK is a diversified pharmaceutical and healthcare company registered in the United Kingdom. In Australia GSK supplies consumer healthcare products, including its Panadol, Macleans, and Zovirax branded products, to pharmacies via pharmaceutical wholesalers. Via the grocery distribution channel, GSK supplies consumer healthcare products directly to grocery retailers. Of most relevance to the Undertaking, GSK supplies nicotine replacement therapy gum, patches, lozenges and oral strips under the Nicabate brand in Australia.

Novartis is a diversified pharmaceutical and healthcare company registered in Switzerland. In Australia, Novartis supplies consumer healthcare products to pharmacies through pharmacy wholesalers. Novartis also supplies such products directly to a number of pharmacies. The majority of Novartis products are supplied only in the pharmacy channel. In the grocery distribution channel, Novartis supplies consumer healthcare products directly to grocery retailers. Of most relevance to the Undertaking, Novartis supplies nicotine replacement therapy gum and patches under the Nicotinell brand in Australia.

The ACCC has been advised the Proposed Acquisition is expected to close in the first quarter of 2015. 

The objective of the Undertaking is to address any competition concerns that are likely to arise from the proposed acquisition by removing the area of competitive overlap between GSK and Novartis in Australia that raises competition concerns.
The Undertaking aims to achieve this objective by:

(a) ensuring that the divestiture business, comprising of the tangible and intangible assets connected with the smoking cessation products currently marketed and supplied by Novartis in Australia under the brand Nicotinell, and the smoking cessation products currently supplied by Novartis in Australia under private label arrangements, is sold to an ACCC approved purchaser;

(b) creating or strengthening a viable, effective, stand-alone, independent and long term competitor for the Australian market(s) for the supply of nicotine replacement products;

(c) ensuring that the purchaser of the divestiture business has all the necessary associated assets and rights to compete effectively with JVCo in the Australian market(s) for the supply of nicotine replacement products;

(d) maintaining the economic viability, marketability, competitiveness and goodwill of the divestiture business prior to divestiture; and

(e) providing for the effective oversight of GSK and Novartis Australia’s compliance with this Undertaking.

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