Wesfarmers’ takeover of Australian Pharmaceutical Industries has been given the greenlight to proceed after getting clearance from the competition regulator, the ACCC.
The Commission announced its decision in a statement of Friday morning.
The ACCC said its review of the proposed bid mainly focused on the markets for the retail sale of over-the-counter pharmaceutical and beauty & personal care products.
“Our investigation showed that there are many large and well-established retailers, including Chemist Warehouse, Woolworths and Coles, that will compete strongly with Wesfarmers after the acquisition in both the market for over-the-counter pharmaceutical products and the market for beauty & personal care products,” ACCC Commissioner Stephen Ridgeway said in the statement.
“We consider that API’s competitors will continue to compete strongly with Wesfarmers after the acquisition.”
API is a retailer and wholesaler of pharmaceutical and beauty & personal care products. It owns the Priceline retail business and is the franchisor for, and distributes products to, independently owned Priceline Pharmacies. API also owns the Priceline Sister Club customer loyalty scheme.
Wesfarmers has substantial retail holdings including Kmart, Target and Catch businesses which each sell a range of over-the-counter pharmaceutical and beauty & personal care products. Wesfarmers also owns 50% of the Flybuys customer loyalty scheme.
The ACCC also considered the potential effects on competition of Wesfarmers owning both the Priceline Sister Club and 50 per cent of Flybuys.
The investigation focused on whether the proposed acquisition would reduce competition by incentivising and locking customers into shopping at Wesfarmers-aligned pharmacies and providing Wesfarmers with access to increased customer data.
“Wesfarmers acquiring the Priceline Sister Club loyalty scheme will not have a lock-in effect on consumers in any market,” Mr Ridgeway said.
“We also consider the benefits obtained from the additional customer transaction data do not appear to be so strong as to result in a substantial lessening of competition from the acquisition.”
“Customers generally do not only join one loyalty scheme, and major competitors to Wesfarmers after the acquisition will have, or could start, their own customer loyalty schemes.”
The ACCC said it had consulted a wide range of stakeholders during the investigation. “Most did not have any concerns and noted that the relevant markets have a large number of suppliers and retailers.”
“A small number of industry participants raised some competition concerns about the acquisition. After considering these concerns, the ACCC maintained its view that the proposed acquisition would not have the effect or likely effect of substantially lessening competition.”
The ACCC pointed out that Wesfarmers will be required to comply with the same laws and regulations as API regarding pharmacy ownership and location, and will have the same obligations as API under the Franchising Code of Conduct.
