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British American Tobacco’s (BAT) Twisp acquisition could raise more than few questions.

The first many insiders ask is why one of South Africa’s top cigarette distributors went through the acquisition process to enhance its vaping footprint in South Africa? Couldn’t a few organic moves have sufficed?

The biggest lingering question, however, is what impact January’s agreement will have on pricing throughout the country if the deal is eventually finalized by government officials. The Competition Commission, along with industry leaders, appear to be concerned and could detour any approval, according to Business Insider South Africa.

One of the country’s top vaping products distributors, Twisp certainly would provide BAT with a tighter grip on the market.

“The merger is likely to result in unilateral effects which may manifest in the form of an increase in prices of e-cigarettes in future or a reduction in the rate of price reductions that could potentially occur with BAT’s entry,” said the Competition Commission in a prepared statement. “(The deal could also create) a reduction in the quality or rate of innovation of e-cigarette products offered post-merger.”

The BAT Twisp acquisition must receive final approval from the South African Competition Tribunal. It will not be easy.

Formed to create vaping competition in the country, the Competition Commission appears to be suspicious of the proposed merger.

“It would have (already) been in a position to compete effectively against Twisp,” the commission said. “The Commission recommends that the proposed transaction be prohibited.”

BAT defended its position.

When the proposed acquisition was announced, BAT South Africa CEO Soraya Benchikh remained steadfast in promoting the deal as a way to put it in a more sustainable position.

“We are committed to the growth of our next generation products business,” Benchikh said. “It was only natural that we extend our offering in (South Africa) with a range that is familiar to this market.”

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