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Sara Lee Sell-Offs Attract ‘Extra Care’ From Regulators, EU Says

Sara Lee Corp.’s sale of its insecticide unit to S.C. Johnson & Son Inc. is among the company’s divestments that’s required “extra care” from regulators, the European Union’s antitrust chief said.

The bug-killer deal is the latest Sara Lee sell-off to be examined in-depth by the European Commission after the regulator imposed conditions on Unilever’s plan to buy its shower-gel and European detergents.

The EU has “had to look into these deals with extra care” because the companies are active in the same industry, said Joaquin Almunia, the EU competition commissioner, in a Brussels speech today. Unilever’s pledge to sell the Sanex brand in Europe to win EU approval is “an example of our preference for remedies that are clear cut, structural and immediately effective.”

The EU’s antitrust agency can block deals if the combined company would have the power to fix prices or prevent new rivals emerging. Sanex was main reason why Unilever did the deal, said Andy Smith, an analyst at MF Global in London, in an interview earlier this month.

The commission extended its probe into the insecticide deal in December amid concerns the transaction may lead to “substantial overlapping activities” in Spain, France, Belgium, Greece and the Czech Republic.

Under the terms of the transaction, Sara Lee, based in Downers Grove, Illinois, would get 153.5 million euros ($212.4 million) for the insecticide business sought by closely held S.C. Johnson, the maker of Ziploc bags and Windex glass cleaner.

‘Compete Closely

The companies’ “household insecticide brands compete closely with each other in these countries, where the removal of an important competitor may lead to increased prices and less choice,” the commission said, adding that an offer last year of antitrust remedies by S.C. Johnson, maker of the Raid bug killer, “did not remove” competition concerns.

The EU agency has set a May 12 deadline to rule on the deal.

In today’s speech on merger review policy, Almunia said EU regulators would avoid calls for it to take into account trade or political concerns when it probes deals.

He said the EU approved Prysmian SpA’s bid for cablemaker rival Draka Holding NV “exclusively on competition analysis” without examining a parallel cartel investigation into the two companies or allegations that a rival Chinese bidder received Chinese state subsidies.

Almunia also said the commission is studying a possible extension of EU merger rules to encompass minority shareholdings. The EU’s antitrust agency currently only looks at deals that give a company control of another.

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