Regulator approve Chemist Warehouse, Sigma Healthcare merger

ABC NEWS (Australia)

The consumer watchdog has approved a deal which will see Chemist Warehouse become the largest pharmacy retailer in Australia. The merger with wholesaler sigma healthcare would then control nearly one thousand pharmacies.

Transcript

00:00For 52 years, Andrew Robinson and his family have run this pharmacy.

00:07As a franchisee of Sigma Healthcare, he's not worried about its merger with Chemist

00:11Warehouse.

00:12Better buying opportunities, it's only going to continue the competition as long as pricing

00:17doesn't become predatory.

00:19The new entity will operate 950 pharmacies, giving it a 16% share of the total retail

00:25market.

00:27Pharmacies will still be able to operate under their existing banners, including Chemist

00:31Warehouse, MyChemist and Amcal.

00:34Sigma is also a wholesaler of pharmaceutical products and the new company will own 16 distribution

00:40centres across Australia and New Zealand.

00:43Buy the competition out and put your prices up.

00:47When they have a bigger market share, they can hike up the prices.

00:51The ACCC slapped conditions on the deal, establishing an independent auditor and allowing

00:57pharmacies to exit the group with their data deleted.

01:01Any naughty behaviour is a breach of a court-enforceable undertaking and is therefore in contempt

01:09of court.

01:10Chemist Warehouse and Sigma say the ACCC's approval is an important milestone, but not

01:16all industry players are happy.

01:17The lobby group, representing thousands of pharmacies, says the regulator will need to

01:22closely monitor the merger to ensure it doesn't reduce competition and lead to higher prices.

01:28The deal as it was proposed would have led to a substantial lessening of competition.

01:34The changes that have been offered in the undertaking get rid of some of those problems.

01:40The deal still needs to be approved by shareholders and the federal court.

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