Antitrust Law Daily Wrap Up, ANTITRUST NEWS: U.K. pharmacy merger gets conditional approval, (Aug 2, 2016)

By Edward L. Puzzo, J.D.

The proposed acquisition of Sainsbury’s pharmacies by Celesio's subsidiary Lloyds Pharmacy has been granted conditional approval, the U.K.’s Competition and Markets Authority (CMA) announced today.

Celesio AG, through its subsidiary Lloyds Pharmacy Limited, operates around 1,540 pharmacies across the U.K. It intends to acquire Sainsbury’s 277 pharmacies, which are usually located inside Sainsbury’s supermarkets. The inquiry group of independent panel members investigating the merger identified 12 areas in England and Wales where the two companies’ pharmacies are such close competitors that the merger may be expected to lead to a substantial lessening of competition (SLC). As a result, approval of the merger will require that Celesio sell a Lloyd's Pharmacy in each of the 12 areas to a new owner, in order to maintain the current level of competition for local customers. Celesio will not be permitted to close these pharmacies.

"In those areas where a Sainsbury’s pharmacy is currently a strong competitor, under common ownership Lloyds might be able to reduce service quality to increase profits without being concerned about losing customers to a rival," stated Inquiry Chair Simon Polito. "By selling the Lloyds pharmacy in those areas to a new owner with the relevant expertise and the incentive to attract customers through its service quality, we can ensure that customers do not lose out from this deal."

Companies: Celesio AG; Lloyds Pharmacy Limited; J. Sainsbury plc

News: Antitrust