No significant change in cigarette market with JTI acquisition of Mighty

Japan Tobacco Inc.’s acquisition of Mighty Corp. will not significantly change the cigarette market in the Philippines, the Philippine Competition Commission (PCC) said.

Post-acquisition, JTI Philippines’ market share in the low-end segment will increase to 51 percent, just a notch above Mighty’s 50 percent prior to the acquisition, PCC commissioner Stella Luz Quimbo said.

Pre-merger, Mighty held 50 percent and JTI held one percent, which are the shares for the low-end segment of the market, Quimbo said, citing PCC’s market studies.

“There is only a marginal increase in the low-end segment. The merger won’t increase their market share significantly,” she said.

Thus, Quimbo said the PCC approved the deal as it found no significant impact on the market after the acquisition.

In the low-end cigarette market, Mighty’s Marvels and Mighty brands account for 50 percent with the rest accounted for by dominant cigarette player PMFTC, the partnership between Philip Morris and Lucio Tan’s Fortune Tobacco. These are Fortune, Jackpot and Champion cigarettes.

At the same time, she said, the acquisition also makes JTI a stronger player against market leader PMFTC, which is seen making the cigarette market in the Philippines more competitive.

PMFTC, as the market leader, has a 71 percent share. Mighty held a 23 percent share, while JTI accounted for 4.2 percent of the market.

JTI acquired Mighty Corp. from the Wongchuking family for P46.8 billion, heralding a new era in the local cigarette industry with multinational cigarette companies now the dominant players.

JTI, the parent company of JTI Philippines, said the acquisition is in line with the group’s geographic expansion for sustainable growth.

“It also provides a nationwide distribution network in the Philippines and strengthens the group’s brand portfolio with the addition of local brands such as Mighty and Marvels,” JTI said.

On Aug. 29, the PCC approved the deal, noting that the transaction would not result in anti-competitive coordinated behavior.

With the completion of the acquisition, JTI Philippines now owns the sales and distribution network, manufacturing and equipment and inventories of Mighty, while affiliate JT International SA (JTI SA) will own the trademarks and associated intellectual property of Mighty Corp. and Wong Chu King Holdings Inc.