Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canada Competition Bureau approves sale of 13 Loblaw grocery stores, (Jul 22, 2014)

The Canada Competition Bureau announced yesterday that it has approved the sale by Loblaw of two No Frills stores to Metro Inc. and two Shoppers Drug Mart stores to the Jean Coutu Group, as well as the license of nine pharmacies within a Loblaw store to Remedy’s Rx. These transactions are being made under the March 2014 Consent Agreement between Loblaw and the Bureau relating to Loblaw’s acquisition of Shoppers Drug Mart. The consent agreement was designed to preserve competition in the retail sale of pharmacy products and drugstore-type merchandise in Canada.

The proposed transaction would combine Loblaw, Canada’s largest grocery chain, with Shoppers, Canada’s largest drugstore chain. The combined retailer would operate approximately 2,738 stores and 1,824 pharmacies across the country.

In those four markets, the competition concerns did not relate only to pharmacy products within the grocery store (e.g. prescription medications and over-the-counter drugs), but also to drugstore-type merchandise, including health and beauty aids (e.g. shampoo, facial tissues and make-up), household items (e.g. cleaning products), and certain food products (e.g. milk, eggs and cookies), all of which are sold in both Shoppers Drug Mart and Loblaw.

When conducting its review of Loblaw’s acquisition of Shoppers Drug Mart, the Bureau examined the level of retail competition in each and every market where both a Loblaw-owned grocery store and a Shoppers Drug Mart were present. Competition concerns were identified in 27 markets, according to the Competition Bureau’s position statement.

The Consent Agreement will require the sale of 18 retail stores and 9 pharmacies within a Loblaw store to an independent operator. It also contains certain behavioral restrictions on Loblaw programs and agreements with suppliers. Under the terms of the Consent Agreement, Loblaw will license to Remedy’s a pharmacy within nine Loblaw-owned grocery stores in Ontario and Newfoundland. It also will sell two No Frills stores in Ontario to Metro and two Shoppers Drug Mart stores in New Brunswick to Jean Coutu. As part of the Consent Agreement, Loblaw is required to sell the remaining 14 retail stores. The stores are to be sold to a new owner that will continue to operate them. Under the agreement, Loblaw is not permitted to simply close them.

Metro employs over 65,000 people in Quebec and Ontario and operates a network of almost 600 food stores as well as over 250 drugstores. The Jean Coutu Group operates a network of 414 franchised stores located in Quebec, New Brunswick, and Ontario and employs close to 20,000 people. Remedy’s operates a retail banner buying group with 275 independent members in six provinces. Remedy’s also owns and operates over 25 pharmacy locations across Canada.

Companies: Loblaw Companies Limited; Shoppers Drug Mart Corporation; Metro Inc.; Jean Coutu Group; Remedy’s Rx.

News: Antitrust