The ACCC is seeking feedback on Sigma Healthcare Ltd's (ASX: SIG) proposal to acquire Chemist Warehouse Group Holdings under a court-enforceable undertaking.
Sigma is a major wholesaler of prescription medicines, over-the-counter products, as well as front-of-store items. It is also a franchisor of pharmacies under banners such as 'Amcal+' and 'Discount Drug Store'.
Under its brands 'Chemist Warehouse', 'MyChemist', 'Ultra Beauty', 'My Beauty Spot' and 'Optometrist Warehouse', Chemist Warehouse is a franchisor, wholesaler, and distributor to pharmacies and retail outlets.
In June 2024, the ACCC published a statement of issues which identified a range of preliminary competition concerns regarding the proposed acquisition, including those at the retail level and those from the proposed integration.
It was feared that Sigma would be harmed and that Chemist Warehouse would be able to access pharmacies' data unfairly.
Sigma has offered a court-enforceable undertaking to address these preliminary concerns, which would require Sigma to:
- For a period of three years, franchisees who entered into their franchise agreements with Sigma prior to 1 January 2024 will not be prohibited from terminating their franchise agreements. Upon termination of the franchise agreements, Sigma will waive its right to recover contributions made under the franchise agreements and future fees due to Sigma.
- Place restrictions on the collection, use and disclosure of confidential data and information from Sigma wholesale customers and franchisees for three years.
- Remain a participating pharmaceutical wholesaler under the Commonwealth Government’s Community Service Obligation (CSO) arrangements for at least five years. The CSO arrangements contain service standards and compliance requirements for the wholesale distribution of prescription medicines to all pharmacies.
“We are now seeking feedback from stakeholders on whether the draft undertaking offered by Sigma may be capable of addressing the competition concerns arising from its proposed acquisition of Chemist Warehouse,” ACCC Chair Gina Cass-Gottlieb said.
There is a continuing investigation by the ACCC into the impact of the proposed acquisition.
“While the ACCC is publicly consulting on this undertaking, this should not be interpreted to mean that this or any other form of undertaking will ultimately be accepted by the ACCC,” Ms Cass-Gottlieb said.
The ACCC invites submissions on the proposed undertaking by 14 October 2024. Parties can contact the ACCC via [email protected].
The draft undertaking incorporating the proposed remedy may be found here: Sigma Healthcare Limited – Chemist Warehouse Group Holdings