The Commission explained that the agreement between BAT and Twisp was signed last January, and made it clear that in its opinion this merger will have only negative consequences. Twisp is believed to be the biggest distributor of vaping products in the country, and the commission fears that this merger could result in higher prices.
“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 thinks the merger is unnecessary
The commission, who is concerned with ensuring competition in South Africa, said that BAT is already prominent in the e-cigarette market internationally and could have easily entered the South African market without the merger. “It would have been in a position to compete effectively against Twisp, the largest and dominant e-cigarette supplier in the country.”
The deal has yet to be approved by the South African Competition Tribunal, however the Commission has already made it clear that it is against it. “The Commission recommends that the proposed transaction be prohibited.”
BAT committed to keep expanding in the e-cig market
In the meantime, last January, the CEO of BAT South Africa Soraya Benchikh, said that the tobacco giant is committed to keep expanding into the safer alternatives market. “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,” she said, “We are excited about acquiring a leading vapour brand and the opportunities it presents.”
Read Further: Business Insider South Africa