Green light for Sigma and Chemist Warehouse merger

Chemist Warehouse sign. | Newsreel
The ACCC has given the green light to the merger of Sigma and Chemist Warehouse. | Photo: Catrin Haze (iStock)

The mulit-billion-dollar merger between Sigma Healthcare and Chemist Warehouse has been given the green light by the Australian Competition and Consumer Commission (ACCC).

ACCC Chair Gina Cass-Gottlieb said the merger, reported at being valued at $8.8 billion, would not be opposed, after the Commission accepted a court-enforceable undertaking from Sigma.

“The ACCC found that, with the undertaking, the proposed merger is unlikely to substantially lessen competition,” Ms Cass-Gottlieb said.

“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.”

She said Sigma was a pharmacy wholesaler of prescription medicines, over the counter and front of store products and a franchisor of pharmacies under banners including Amcal and Discount Drug Store, while Chemist Warehouse was a pharmacy franchisor and distributor to its own pharmacies and retail stores under the brands Chemist Warehouse, MyChemist, Ultra Beauty, My Beauty Spot and Optometrist Warehouse.

“The ACCC’s analysis found that the proposed merger is unlikely to substantially lessen competition nationally or locally because other pharmacies and non-pharmacy retailers will continue to compete to the same extent they compete now.

“Consumers value different aspects of Sigma’s and Chemist Warehouse’s banner pharmacies’ offerings. Importantly, consumers will continue to have choice between smaller format stores offering personalised services to consumers and the Chemist Warehouse offering, focussed on larger format discount stores and front-of-store offerings,” Ms Cass-Gottlieb said.

She said for reasons, including changes to the pharmacy regulatory environment, the ACCC also found that a combined Sigma Chemist Warehouse would be unlikely to influence Sigma banner pharmacies to the same extent Chemist Warehouse influenced its current franchisees.

“Sigma franchisees are expected to continue to make their own individual commercial decisions.”

She said the undertaking given by Sigma ensured pharmacies currently engaged in longer term contracts with Sigma would also be able to readily switch wholesalers should they choose to do so, strengthening the competitive constraint of alternative wholesale supply options.

“The ACCC therefore formed the view that a combined Sigma Chemist Warehouse will be unable to foreclose downstream pharmacies that compete with Chemist Warehouse franchisees.”