U.K. Regulator Says Reckitt’s K-Y Acquisition Would Raise Prices

Reckitt Benckiser Group Plc’s proposed acquisition of Johnson & Johnson’s K-Y lubricant brand could lead to price increases, the U.K. competition regulator said.

The two companies combined would sell almost 75 percent of of the personal lubricants in U.K. supermarkets and pharmacies, the Competition and Markets Authority said in a statement Friday. The regulator recommended remedies including the sale or licensing of the K-Y brand in Britain and extended the probe it began in January by eight weeks. A final decision is now expected Aug. 18.

“The merger could lead to a substantial reduction in competition, possibly through higher prices, making customers buying these products in grocery retailers and national pharmacy chains worse off,” the CMA said.

Reckitt Benckiser brushed off the decision, saying that the rationale for buying K-Y’s gels and lubricants was to gain access to the brand’s sales in the U.S., Canada and Brazil.

“We’re disappointed and we would have liked to have had a different decision,” Reckitt Benckiser spokeswoman Patty O’Hayer said by phone. “The U.K. would have been nice to have. We will continue to work with the CMA.”

Reckitt Benckiser shares were little changed at 5,854 pence at 8:08 a.m. in London.

The acquisition, for an undisclosed sum, from New Brunswick, New Jersey-based J&J’s McNeil-PPC unit includes global rights to the K-Y brand, the companies have said. K-Y has sales of more than $100 million across 50 countries.

Last month, New Zealand’s Commerce Commission declined the merger, saying it could reduce competition and push up prices.

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