Boots merger gets the all clear
The OFT has decided today not to refer the anticipated acquisition by Boots plc of Alliance UniChem plc to the Competition Commission provided that satisfactory undertakings to address the competition concerns arising from the supply of retail pharmacy services in certain localities in the UK are given
If the parties do not give such undertakings, then the transaction will be referred.
John Fingleton, OFT Chief Executive said ‘This is a market in which government regulations restrict competition by imposing barriers to new market entrants. As a result, cost savings arising from this merger may not be fully passed on to consumers in the form of enhanced services. There remains a strong case for the government to reconsider the costs to consumers of maintaining these disproportionate restrictions on competition in the retail pharmacy sector.’
Vincent Smith, OFT Competition Enforcement Director added ‘The loss of rivalry between a Boots and UniChem pharmacy in a local area could give rise to competition concerns where consumers have limited alternative choices and given the regulatory barriers to new entry. This merger raises the realistic prospect of a substantial lessening of competition in around 100 local areas where competition would either be eliminated altogether or reduced. Customers in these areas would have a significantly reduced choice of local pharmacy. However, Boots has offered divestment undertakings for all of these areas and the OFT is satisfied that these will address its concerns.’
