Merz Lifecare and WindStar can create joint venture

The Bundeskartellamt has cleared plans to merge the healthcare and cosmetics companies Merz Lifecare and WindStar in the first phase of merger control.

Merz Lifecare is an indirect subsidiary of Merz Holding GmbH & Co. KG, Frankfurt. WindStar is an indirect subsidiary of investment company Oakley Capital Group Holdings Ltd, Bermuda. The subsidiaries are to be merged by creating a joint venture which will be controlled by Merz.

Both Merz Lifecare, with brands including “Tetesept” and “Merz Spezial”, and WindStar, with brands including “Zirkulin” and “SOS”, develop and distribute health and cosmetic products which are sold to end customers by drugstores, food retail stores, online retailers and pharmacies, in particular.

Andreas Mundt, President of the Bundeskartellamt: “The concentration brings well-known brands for over-the-counter health and cosmetic products together under one roof. However, consumers and retailers will continue to have sufficient alternatives to choose from. In addition, drugstore chains and food retailers have considerable buyer power which will limit the joint venture’s scope of action, particularly when it comes to setting prices. Having assessed the results of our market investigations, we could clear the project within the one-month deadline in the first phase of merger control.”

The project was notified in Germany, Austria and Poland. In Germany the parties’ activities overlap in many product markets. As a result of the concentration, brands such as “Tetesept” or “Merz Spezial” and “SOS” or “Zirkulin” are brought together under one roof. The parties have a strong combined market position in individual segments of the markets for footcare, vitamin and mineral supplements and cold remedies.

However, this is mitigated by the fact that retailers use a multi-brand strategy and have the possibility of switching to products offered by other competitors or alternative products in neighbouring markets. In addition, barriers to entry are low for over-the-counter products as there are limited regulatory requirements. Significant competitive pressure is exerted by competing products which are sold through the separate pharmacy distribution channel and, in particular, by the increasingly important sales through online marketplaces.

All things considered, the planned concentration will not harm competition to the detriment of consumers.