Lloydspharmacy may have to sell branches in 13 areas of the UK if it wants to go ahead with the £125m deal to acquire 277 Sainsbury’s instore pharmacies and another four that the supermarket chain runs in NHS trusts.
The Competition and Markets Authority (CMA) – which has been investigating the business plan since December 2015 – has identified 13 districts where it believes competition would be reduced if the proposals go ahead, because of the proximity of existing Lloydspharmacy branches.
If the acquisition goes ahead in those districts it “may lead to adverse effects for customers in terms of a reduction in the quality of service provided”, according to the CMA’s provisional findings published on 29 April 2016. A takeover by Lloydspharmacy of Sainsbury’s pharmacies within NHS trusts would not have a similar impact because of limited competition in this market, it adds.
Simon Polito, chair of the CMA independent inquiry panel that has led the investigation, says: “We found evidence that there were some differences in the characteristics of Sainsbury’s and Lloydspharmacy customers but we also found that customers would be willing to switch between Lloyds and Sainsbury’s pharmacies, particularly where the number of convenient competitor pharmacies was low.
“We have provisionally found that after the merger Lloyds will no longer face sufficient competition in 13 areas and expect that in these areas customers will lose out. We are now inviting responses to these provisional findings and will discuss ways in which we can address our concerns.”
The CMA invites comments on its provisional findings by 23 May 2016 before making a final decision in June 2016.