The Office of Fair Trading (OFT) has decided not to refer the $2.4bn takeover of Alberto Culver by Unilever to the Competition Commission, and instead taken an assurance from Unilever that it will offload Culver's bar soap division.
In a statement, the OFT approved the sale of Alberto Culver to Unilever, and concluded that the takeover would not present competition concerns, except in bar soaps.
The OFT said respondents to its OFT's consultation "commented on the closeness of competition between Unilever's Dove brand and Alberto Culver's Simple brand and this was confirmed by the OFT's investigation".
Consequently, Unilever has offered to divest the bar soaps business of Alberto Culver, which includes the Cidal, Wright's and Simple brands.
However, the restriction is limited to the bar business, which means a third company could potentially produce Simple, Cidal and Wright's soaps, while Unilever would own the brands in other categories.
The Simple portfolio includes bath and shower products, beauty products, moisturisers and babycare products.
Unilever's Dove portfolio includes bath and shower products, haircare, deodorant and lotion lines.
Ali Nikpay, senior director and decision maker for the OFT in this case, said: "We received a number of representations about the impact of this merger on competition in the bar soaps market. After a thorough investigation, we concluded that it did raise competition concerns in this market and we are now considering remedies offered by the parties to resolve these."
The deal is still awaiting clearance from regulators in the US and other markets.
Alberto Culver's shareholders approved the proposed $3.7bn (£2.38bn) takeover in December, and will mark Unilever's second major takeover in a year, following the $1.2bn (£1bn) acquisition of Sara Lee's homecare and laundry businesses in December.
In a similar negotiated settlement, Unilever agreed to offload the Sanex brand in order to satisfy European regulators' competition concerns.
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