Lloydspharmacy should be allowed to takeover Sainsbury’s pharmacy business, Day Lewis has said.

The sale of Sainsbury’s 281 pharmacies to the multiple is currently under investigation by the government’s competition watchdog over fears it could reduce consumer choice.

As part of the investigation, the Competition and Markets Authority has met with other multiples to discuss the deal.

Day Lewis told the CMA in January that the £125 million deal would have a “minimal effect” on the market, according to a CMA report of the meeting released last week (March 18).

Sainsbury’s pharmacies will be run “more efficiently” after the deal because Celesio UK – the owner of Lloydspharmacy – is a “top-end operator”, Day Lewis said.

Day Lewis not worried by deal

The CMA launched its investigation in January after voicing concerns that the deal could reduce patient choice in 78 areas. A competition lawyer warned at the time that the multiple’s competitors could “scupper” the deal during the investigation.

But Day Lewis appears unconcerned about Lloydspharmacy’s acquisition.

In the CMA’s report, released last week, Day Lewis said the Walgreens buyout of Boots UK had produced a much “bigger player” than the planned acquisition of Sainsbury’s pharmacies. Therefore, this proposed deal should go ahead, it said.

Boots gives evidence

Day Lewis are the latest in a string of multiples to discuss the deal with the CMA.

Boots also met with the watchdog in January, and revealed that Sainsbury’s were “proactively” seeking a buyer. 

Had Celesio not purchased Sainsbury's pharmacies, another large pharmacy businesses would have, it said.

The deal would result in one less competitor for Boots, but it would create a “stronger competitor”, Boots said, according to a CMA report of the meeting released earlier this month.

Deal could hurt smaller wholesalers

Manor Pharmacy – a 62-strong Midlands chain – told the CMA it was “comfortable” with the merger in a January meeting. But it warned that Sainsbury’s stores that faced competition only from Lloydspharmacy should be sold to other companies.

It also voiced concerns over the impact of the deal on small, regional wholesalers.

Adding Sainsbury’s pharmacies to the books of Celesio – and thus AAH, the wholesaler it owns – will take market share away from smaller players, it said. It advised the CMA to look at this in more detail.

The CMA has also met with supermarkets Asda and Tesco to discuss the merger.

 

More news on the deal...

Watchdog presses ahead with Sainsbury's sale investigation

Lloyds competitors may try to 'scupper' Sainsbury's sale

Day Lewis ‘very keen’ to buy Lloyds pharmacies