CMA clears Celesio/Sainsbury’s Pharmacy merger in Phase II, subject to divestments
Following an in depth investigation the CMA has cleared the acquisition by Celesio AG (which owns the Lloyds Pharmacy chain) of Sainsbury’s Supermarkets UK Pharmacy Business, subject to the divestment of 12 Lloyds pharmacies. The merger was referred for an in depth investigation as at the end of the Phase 1 investigation the CMA identified 78 pharmacies where it felt there was a realistic prospect of an SLC and a further 106 pharmacies where the CMA was unable to conclude whether there was a realistic prospect of an SLC. The CMA’s initial Phase 2 filtering exercise identified 154 pharmacies as potential SLCs (including some stores not identified by the phase 1 investigation), but this was reduced to 78 stores in 32 areas during the Hearings, and further to 18 stores in 13 areas in the Provisional Findings.
CRA’s work included empirical analysis of the relationship between concentration and store-level quality/range/service measures and margins, developing arguments of economic principle relating to the correct use of diversion and local concentration measures, as well as assessment of and feedback on the CMA’s own analyses and calculation of critical diversion thresholds appropriate to the theory of harm. We also undertook analysis of survey data and substantial data gathering, processing and mapping exercises related to the geographic data on local overlaps.
The CMA’s Decision can be found here.