Hypermarcas purchases Olla and Jontex

The Tribunal of the Administrative Council for Economic Defense – CADE - approved on Wednesday, September 11th, two operations involving Hypermarcas S/A. The first operation deals with the acquisition of a condom producer marketed under the brand named Jontex - owned by the Johnson & Johnson group, and until then controlled by Latam. (Merger file no. 08012.008623/2009-40). The second operation refers to the purchase of the Indústria Nacional de Artefatos de Látex S/A (INAL for is acronym in Portuguese), which markets the condom brands named Olla, Lovetex and Microtex, and the lubricant gel brand Olla. (Merger file no. 08012.008724/2009-11).

The transactions were approved without restrictions. CADE’s Tribunal understood that the merger did not result in anticompetitive effects in the intimate lubricants market and the condoms market in the public and private sector. The acquisitions authorized by CADE represent the entry of Hypermarcas in the market of condoms.

Furthermore, the Tribunal considered that the cost of building a reliable and recognized brand in the market of condom retail represents a significant barrier to entry, since the main product differentiation for the consumer's confidence is the brand.

In the opinion of the reporting commissioner, Alessandro Octaviani Luis, in the lubricants market there was a mere substitution of economic agent, since only INAL produced the product.

Regarding the condom market in the public sector, Octaviani explained that alien companies are the main suppliers to the federal, State, municipal and non-governmental organizations – who organize free distribution of products in their respective STD prevention programs. According to the reporting commissioner, out of all the companies involved in the operation, only INAL eventually operates in this market. Thus, the acquisitions made by Hypermarcas do not have the potential to harm competition.

The reporting commissioner also pointed out that the market for condoms in the private sector is characterized by intense rivalry. "The evolution of the market shares of companies operating in this sector shows that there are brands with the ability to compete effectively with the brands under discussion", he said.