EXCLUSIVE

Lloydspharmacy's competitors may try to “scupper” its acquisition of Sainsbury’s pharmacy business if a government watchdog investigation into the deal goes ahead, a competition expert has predicted.

The two companies face an “in-depth” investigation into the £125 million sale of the supermarket’s 281 pharmacies unless they can address the Competition and Markets Authority’s (CMA) concerns that the deal could reduce consumer choice in 78 areas, the watchdog announced last week.

Competition consultant Vivienne Robinson told C+D last week (December 11) that Lloydspharmacy's rivals will be asked to input into any investigation, providing them with an “ideal” opportunity to prevent the multiple from expanding.

The CMA told C+D last week that the companies may have to find new buyers for the pharmacies in the affected areas, or leave these branches in the hands of Sainsbury's. Ms Robinson said competitors could use the investigation as an opportunity to "pick up [these] stores when they're sold".

Investigation looks likely

The two companies have until Friday (December 18) to address the CMA's competition concerns and prevent it from launching an investigation, but Ms Robinson predicted that the companies will not submit proposals before then.

The CMA has taken longer than usual to examine the deal, having launched its initial investigation in September, which suggests the parties have already "wrangled" over the details, she said.

“I think Lloydspharmacy and Sainsbury’s know whether they have any chance of getting out from underneath this. I suspect they’ve reached the end of discussions and they’ve tried very hard to convince the CMA that [competition is not reduced] in the 78 [areas]," she told C+D.

Ms Robison said she suspects that losing pharmacies in 78 areas is "too big a pill to swallow" for the companies, and the CMA will be forced to open an in-depth investigation.

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