The European Commission approves acquisition of Sara Lee Household and body care business by Unilever subject to conditions

In our August and September bulletin, we reported that Unilever had lodged undisclosed remedies in response to formal objections issued by the European Commission (the Commission) in relation to its proposed acquisition of Sara Lee’s Household and body care businesses. On 17 November 2010 the Commission approved the acquisition, subject to the remedies explained below.

Both Unilever and Sara Lee are active in the markets for deodorant, skin and fabric care products. The Commission identified a number of product overlaps within the EU (and in particular in Belgium, the Netherlands, the UK, Ireland, Spain, Portugal and Denmark) and was concerned that the acquisition would create an entity with a very high combined market share in a number of different markets. In relation to the deodorants market in particular the Commission was concerned that the combination of Sara Lee’s “Sanex” brand with Unilever’s “Dove” and “Rexona” brands (which are close competitors in many Member States) would pose significant competition concerns.

In response to these concerns, the parties have agreed to divest Sara Lee’s “Sanex” brand and related businesses in Europe. Interestingly, the “Sanex” brand which is to be divested includes a number of products beyond the product of primary concern (deodorant) but divestiture of the entire brand was considered by the Commission to be preferable to the alternative of granting intellectual property rights over products within the brand.