UK watchdog says Reckitt's K-Y buy could hurt competition

LONDON (Reuters) - Reckitt Benckiser Group's (RB.L) proposed purchase of K-Y personal lubricants from Johnson & Johnson (JNJ.N) could lead to less competition and higher prices, Britain's competition watchdog said on Friday.

It said it would extend its inquiry and would consider blocking Reckitt's purchase or forcing the divestiture of K-Y's UK business or the licensing of relevant rights for K-Y to a third party.

K-Y and Reckitt's Durex brand together would hold almost three-quarters of the lubricant market in UK supermarkets and national pharmacies, where the majority of these products are sold, the Competition and Markets Authority (CMA) said.

"The group provisionally believes that on balance the merger could lead to a substantial reduction in competition, possibly through higher prices, making customers buying these products in grocery retailers and national pharmacy chains worse off," the regulator said in a statement.

After extending the timetable of its inquiry by eight weeks, the CMA must publish its final decision by 18 August.

(Reporting by Martinne Geller; editing by Susan Thomas)