Cigarette giant British American Tobacco's planned acquisition of big South African e-cigarette maker Twisp would lead to higher vaping prices in South Africa, according to the Competition, reports Business Insider SA.
British American Tobacco (BAT), South Africa’s largest cigarette distributor, signed an agreement to acquire Twisp in January. Twisp is believed to be the biggest distributor of vaping products in SA.
The deal is subject to approval from the South African Competition Tribunal.
“The merger is likely to result in unilateral effects which may manifest in the form of an increase in prices of e-cigarettes in future or a reduction in the rate of price reductions that could potentially occur with BAT’s entry,” the Competition Commission said in a statement about the proposal.
“[The merger can also lead to] a reduction in the quality or rate of innovation of e-cigarette products offered post-merger.”
The commission, mandated to promote and maintain competition in South Africa, said BAT is prominent in the e-cigarette market internationally and could easily have entered the South African market – without buying a competitor.
“It would have been in a position to compete effectively against Twisp, the largest and dominant e-cigarette supplier in the country.”
“The Commission recommends that the proposed transaction be prohibited.”
When BAT first announced the deal, the multinational said Twisp would help ensure the sustainability of the company in South Africa.
“We already have a large footprint elsewhere in the world. We are committed to the growth of our next generation products business and it was only natural that we extend our offering in SA with a range that is familiar to this market,” BAT South Africa CEO Soraya Benchikh said at the time.
"We are excited about acquiring a leading vapour brand and the opportunities it presents.”
[link url="https://www.businessinsider.co.za/competition-commission-recommends-that-british-american-tobacco-and-twisp-do-not-merge-2018-7"]Business Insider article[/link]