On October 25, 2022, the European Commission approved the proposed acquisition of Swedish Match AB by Philip Morris International, Inc. pursuant to the European Union Merger Regulation, subject to certain conditions.
Philip Morris is a New York company with sales of tobacco products in 180 countries. Swedish Match is a Swedish company that manufactures and sells tobacco-related products globally; according to the Commission, it holds a de facto monopoly on the distribution of tobacco and nicotine products in Sweden through its wholly-owned Stockholm-based distribution company, SMD Logistics AB.
The proposed acquisition was notified to the Commission on September 6, 2022. The Commission found that the proposed merger, without any modifications, could lead to foreclosure effects in Sweden, since SMD is the sole distributor of certain tobacco products in Sweden (both combustible tobacco and smoke-free products). Although Philip Morris and Swedish Match do compete in other product markets, (loose or compressed tobacco “snus,” nicotine pouches) and other geographical markets (including Norway and Slovenia), the Commission determined that the continued presence of alternative suppliers in those markets following the merger would ensure adequate competition.
Therefore, Philip Morris’ offer to divest SMD once the acquisition of Swedish Match is complete was accepted by the Commission as a satisfactory solution that will remove the vertical links between the manufacture of tobacco and nicotine products and the distribution of these products in Sweden. The purchaser of SMD will require approval by the Commission.
Philip Morris reported on the merger and on the Commission’s approval in its Form 8-K filed with the US Securities and Exchange Commission on October 25, 2022.