THE Australian Competition and Consumer Commission (ACCC) has announced it will not oppose the proposed merger between Sigma Healthcare Limited and Chemist Warehouse Group, contingent upon a court-enforceable undertaking provided by Sigma (PD breaking news).
"The ACCC found that, with the undertaking, the proposed merger is unlikely to substantially lessen competition," said ACCC Chair Gina Cass-Gottlieb.
"There is and will continue to be effective competition at all levels of the pharmacy supply chain, capable of constraining a combined Sigma Chemist Warehouse."
Cass-Gottlieb added that the ACCC's review indicated that other pharmacies and non-pharmacy retailers will continue competing as they do now, maintaining options for consumers through Sigma and Chemist Warehouse's distinct formats.
Sigma offers smaller, personalised pharmacy services, while Chemist Warehouse is known for its larger, discount-oriented stores.
Sigma CEO Vikesh Ramsunder welcomed the decision, stating, "the ACCC decision marks a critical milestone for the proposed transaction and provides us with the conviction to progress with the next steps in the process".
He added, "the proposed transaction has the potential to create a leading ASX-listed healthcare company through the combination of the complementary strengths of Sigma's state-of-the-art pharmaceutical distribution infrastructure with Chemist Warehouse Group's retailing know-how".
The court-enforceable undertaking, submitted last month (PD 01 Oct), mandates that Sigma continues as a participating wholesaler in the Commonwealth Government's Community Service Obligation for five years.
Sigma also agreed to allow existing franchisees, wholesale, and buying group customers to terminate their agreements without interference within three years, subject to specific terms, and implement data protection measures to ensure compliance.
Chemist Warehouse CEO Mario Verrocchi expressed optimism about the merger, noting, "Chemist Warehouse has a history of driving innovation and competition, based on a high volume, low prices model."
Verrocchi emphasised that the combined strengths in distribution, logistics, retail, and marketing will "drive competition within the industry" and bring "greater value to customers, employees, franchisees, and shareholders".
Sigma stated it is well-advanced in preparing documentation for shareholders to vote on for the proposed merger, which will be reviewed by regulators before being sent to its shareholders. JG
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