‘Major structural change’: ACCC concerned about Sigma, Chemist Warehouse merger

The proposed merger of Sigma and Chemist Warehouse could create a “major structural change” for the pharmacy sector according to a preliminary report from The Australian Competition & Consumer Commission (ACCC).

The merger involves the largest pharmacy chain by revenue and a key wholesaler to thousands of independent pharmacies, ACCC commissioner Stephen Ridgeway said.

“We have identified a range of preliminary competition concerns, including at the retail level and as a result of the proposed integration of the merged firm across the wholesale and retail level.”

According to Ridgeway, the merged company would be vertically integrated across multiple levels of the pharmacy supply chain, which could raise barriers to rivals expanding or entering.

The deal may harm pharmacies currently supplied by Sigma, leading to a substantial lessening of competition in pharmacy retailing, he added.

Other concerns include reduced competition between the two companies and Chemist Warehouse being able to access commercially sensitive data relating to pharmacies supplied by Sigma.

In addition, the ACCC said the proposed acquisition could impact upstream markets for the supply of pharmacy retail products affecting suppliers of products that compete with Chemist Warehouse and Sigma.

The ACCC will receive submissions related to the matter from interested parties until June 27.

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