ACCC approval for Sigma Healthcare merger

Sigma Healthcare (ASX:SIG) has received the green light from the Australian Competition and Consumer Commission (ACCC) for its proposed merger with Chemist Warehouse. The approval is subject to a court-enforceable undertaking from Sigma. The ACCC determined that the merger is unlikely to lessen competition significantly due to existing competition in the pharmacy supply chain.

Overview and implications of the Sigma merger

The ACCC has approved the merger between Sigma Healthcare and Chemist Warehouse, with Chemist Warehouse gaining a majority stake in the merged entity. Sigma shareholders will hold a smaller portion. The ACCC's approval comes with conditions aimed at maintaining fair competition in the market. These include allowing pharmacies in long-term contracts to switch wholesalers without penalties and ensuring that Sigma deletes data of pharmacies that switch. The merger aims to consolidate Sigma's position in the pharmacy sector while ensuring compliance with the Community Service Obligation, guaranteeing access to PBS medicines across Australia. The decision underscores the importance of maintaining competition and consumer choice within the pharmacy supply chain.

Executive commentary on merger approval

The merger is unlikely to substantially lessen competition nationally or locally. Consumers will continue to have varied choices, including personalized services from smaller pharmacies and larger format discount stores from Chemist Warehouse.