New Zealand - Scandinavian Tobacco granted clearance to merge its cigar and pipe tobacco businesses with Swedish Match..

September 25, 2010 - The Commerce Commission has granted clearance for Scandinavian Tobacco Group A/S to merge its New Zealand cigar, pipe tobacco and accessories businesses with that of Swedish Match AB. The clearance is given subject to the merged entity divesting the Willem cigar brand.

Background

Scandinavian Tobacco (ST) is a privately owned Danish company involved in the manufacture and supply of tobacco and associated products. In New Zealand it supplies cigars and pipe tobacco.

Scandinavian Tobacco Group signs Letter of Intent with Swedish Match to form a worldwide company with focus on cigars and pipe tobaccoPress Release, Scandinavian Tobacco Group (STG), 1/15/2010.

Swedish Match is a company based in Sweden which supplies similar products to Scandinavian Tobacco in New Zealand.

Swedish Match and Scandinavian Tobacco Group sign agreement to form a new cigar focused company, Swedish Match Press Release, 4/26/2010.

Commerce Commission Chair Dr Mark Berry said the Commission was satisfied that the proposed acquisition would not have the effect, or likely effect, of substantially lessening competition in the national markets for the import and supply of cigars and pipe tobacco.

The Commission considers that, while the merger would give rise to a significant aggregation of market share in respect of cigars, the divestment of the Willem brand to an independent party will be sufficient to remedy the loss of competition the cigar market.

Because Swedish Match already distributes Scandinavian Tobacco’s pipe tobacco brand in New Zealand, the merger will not materially alter the level of competition in the pipe tobacco market.

A public version of the written reasons for the decision will be available as soon as practicable on the Commission’s website www.comcom.govt.nz/clearances-register.

Reference: Media Release Scandinavian Tobacco granted clearance to merge its cigar and pipe tobacco businesses with Swedish Match, NZ Commerce Commission, 9/22/2010.

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