The European Commission has cleared at Phase I, subject to remedies, the acquisition by UK tobacco company British American Tobacco (BAT) of the cigarette business and certain related interests of Skandinavisk Tobakskompagni (STK), a Danish company. The deal means BAT acquires House of Prince (owner of the Prince brand, among others) and its subsidiaries in various European countries, as well as J.L. Tiedemanns Tobaksfabrik AS in Norway, and Fiedler & Lundgren AB in Sweden.
Adopting as in previous cases a national market definition which separates (factory-made) cigarettes from roll-your-own tobacco, the Commission accepted that the transaction would not impede effective competition in any horizontally-affected market, except the market for cigarettes in Norway, where both parties are active. In addition, the Commission was concerned that the coupling of the merged entity's leading position in cigarettes with STK's high share of roll-your-own tobacco in Norway would place the merged entity in a strong position in sales negotiations with its customers. BAT offered to divest a number of tobacco brands, thus reducing the combined share of both cigarettes and roll-your-own tobacco.
A CRA team including Cristina Caffarra, Ian Small, and Jenny Haydock advised BAT on the case.