Pharmacy chain set to offload stores

WARRINGTON-based Lloyds Pharmacy owner Celesio may have to sell some stores in 13 areas in order to complete its purchase of 277 Sainsbury’s pharmacy stores.

The Competition and Markets Authority (CMA) launched the second phase of an investigation in December and an independent panel has identified areas in England and Wales where the two companies’ pharmacies are “such close competitors that the merger would be expected to lead to a substantial lessening of competition”.

As well as the summary of provisional findings, a notice of possible remedies has also been published which outlines ways to address the competition concerns, including the sale of pharmacies in the affected areas.   

It has provisionally decided that after the merger “Lloyds will no longer face sufficient competition in 13 areas and expect that in these areas customers will lose out”.

Inquiry chairman Simon Polito said: “This is a market in which the scope for competition is reduced compared with many retail mergers. The price of prescription medicines is fixed and there are a number of quality specifications which cannot be reduced below a minimum level because of regulation.

“However we found that since pharmacies’ total revenue is largely dependent on the number of prescriptions issued, pharmacies have an incentive to compete to try to attract additional customers.

“We found evidence that there were some differences in the characteristics of Sainsbury’s and Lloyds pharmacy 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.

The 13 areas are Beaconsfield, Bracknell, Cardiff, Christchurch, Kempston, Kidlington, Leeds, Liverpool, Luton, Reading (Calcot)/Theale, Sandy/Potton/Biggleswade area, Sutton Coldfield and Warlingham.

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