On Tuesday 25 October, the European Commission authorised the proposed acquisition of Swedish Match by Philip Morris International. This authorisation is subject to full compliance with the commitments proposed by Philip Morris International.
Philip Morris International and Swedish Match are suppliers of tobacco and nicotine products. They compete, inter alia, in the manufacture and supply of tobacco and nicotine products for oral use, such as snus and nicotine pouches. Swedish Match has a de facto monopoly on the distribution of tobacco and nicotine products in Sweden through its subsidiary SMD Logistics.
The transaction could have led to a lock-in effect in Sweden, as SMD is the only distributor of combustible tobacco, smoke-free products and related products in that country.
To address the Commission’s concerns, Philip Morris International has proposed to divest the logistics arm of Swedish Match, SMD Logistics.
The commitments consist of the structural divestiture of a stand-alone business, which removes the vertical links between the manufacture of tobacco and nicotine products and their distribution in Sweden. This will enable a purchaser to run the divested business as a viable competitive force in the market. The Commission will closely monitor the divestment process and will have to validate the choice of purchaser for the divested business. (Original version in French by Lionel Changeur)