The consumer watchdog has approved a deal which will see Chemist Warehouse become the largest pharmacy retailer in Australia. The merger with wholesaler sigma healthcare would then control nearly one thousand pharmacies.
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00:00For 52 years, Andrew Robinson and his family have run this pharmacy.
00:07As a franchisee of Sigma Healthcare, he's not worried about its merger with Chemist
00:11Warehouse.
00:12Better buying opportunities, it's only going to continue the competition as long as pricing
00:17doesn't become predatory.
00:19The new entity will operate 950 pharmacies, giving it a 16% share of the total retail
00:25market.
00:27Pharmacies will still be able to operate under their existing banners, including Chemist
00:31Warehouse, MyChemist and Amcal.
00:34Sigma is also a wholesaler of pharmaceutical products and the new company will own 16 distribution
00:40centres across Australia and New Zealand.
00:43Buy the competition out and put your prices up.
00:47When they have a bigger market share, they can hike up the prices.
00:51The ACCC slapped conditions on the deal, establishing an independent auditor and allowing
00:57pharmacies to exit the group with their data deleted.
01:01Any naughty behaviour is a breach of a court-enforceable undertaking and is therefore in contempt
01:09of court.
01:10Chemist Warehouse and Sigma say the ACCC's approval is an important milestone, but not
01:16all industry players are happy.
01:17The lobby group, representing thousands of pharmacies, says the regulator will need to
01:22closely monitor the merger to ensure it doesn't reduce competition and lead to higher prices.
01:28The deal as it was proposed would have led to a substantial lessening of competition.
01:34The changes that have been offered in the undertaking get rid of some of those problems.
01:40The deal still needs to be approved by shareholders and the federal court.