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Sainsbury's pharmacy sale faces 'in-depth' investigation

Deal will increase the network of Lloydspharmacies to around 1,800

The planned sale of Sainsbury's 281 pharmacies to Lloydspharmacy would reduce competition in 78 areas, says a government watchdog


  • Competition watchdog says £125 million deal could affect consumer choice
  • Sainsbury's and Lloydspharmacy have until Friday to address concerns or face further investigation
  • Lloydspharmacy says watchdog has overestimated negative impact of deal

A government watchdog will launch an "in-depth investigation" into Lloydspharmacy's planned acquisition of Sainsbury's pharmacy business unless the two companies address concerns about consumer choice.

Lloydspharmacy announced the deal to buy the supermarket giant's 281 pharmacies for £125 million in July. The deal – scheduled for completion by February – would leave the multiple without any competition in 78 areas, the Competition and Markets Authority (CMA) said on Friday (December 11). 

The companies have until Friday (December 18) to suggest proposals that "could potentially remedy the competition concerns", or the CMA will launch a 24-week investigation into the deal, it told C+D.

If they want the deal to go ahead, the two companies may have to find new buyers for the pharmacies in the 78 areas or leave these branches in the hands of Sainsbury's, the CMA said.

The watchdog was unable to decide if the deal – which will see "up to 2,500" pharmacy staff transfer to the multiple – would reduce competition in any other areas, it said.

Lloydspharmacy can still "press ahead" with the deal while the CMA is conducting its investigation, the watchdog told C+D. 

Lloydspharmacy disputes findings

Lloydspharmacy owner Celesio UK disputed the watchdog's findings. While it accepts "there may be some geographical areas affected by a lessening of competition", it does not believe there are as many as 78, it told C+D.

"We are considering our response to the CMA, including the option of progressing into [an] investigation," it added.

The deal would increase the network of Lloydspharmacies to around 1,800 – 13% of the total number of community pharmacies in the UK. Boots is the only company accounting for a larger share, with 2,300 pharmacies and roughly 16% of the market.

The CMA first announced it would look into the deal in September.
 

More on this topic....

Lloyds likely to be stripped of some Sainsbury's pharmacies

Competition watchdog looks into Sainsbury's pharmacies sale 

"Sainsbury's got 'good deal' for pharmacies, says broker

 

What do you think of the CMA's decision?

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14 Comments

Leon The Apothecary, Student

I think even before this is the issue of how the big multiples are seen in the eyes of pharmaceutical staff and why there's such distrust in them. I think you all know the answer but it seems to be a constantly ignored issue by those who could make a difference.

N O, Pharmaceutical Adviser

The best way forward is to follow the same rule adopted in housing industry. For every new private construction a X number of flats are reserved for social tenants. Similarly we can have a rule that a certain number of pharmacies be left to be owned by independent pharmacists. I know I'm dreaming

Amal England, Public Relations

I totally disagree with you.....your dream is a nightmare. Boots and Lloyds first satisfy owners and shareholders, then the patient. The best way forward is the general situation in Australia and the way many banks are run in Germany. A pharmacist in Australia said the most number of pharmacies a person or company can own is 5! Either the system there is stupid or the system here is stupid- you decide. BUT remember this- the best scenario for the patient is when they have ownership of local services and not some conglomerate on the other side of the planet!

Farm Assistant, Community pharmacist

Any problems and they will just have to up the bribe. Nearly all our politicians can be bought. The good news is at this rate there will be nothing left for sale in this country. Happy Christmas to all us poor pharmacists.

Sami Khaderia, Non healthcare professional

why not just open up the market and let the public choose the winners and loosers

London Locum, Locum pharmacist

Will make no difference. Working as a community pharmacist will largely remain embarrassing.

Harry Tolly, Pharmacist

Surely the multiples believe in "Any willing provider". After all PharmacyVoice (self appointed Voice !!) always pushes this model. I too support this model especially for pharmacy contracts. No restrictions.

Stephen Eggleston, Community pharmacist

The idea of "competition" is supposedly for the benefit of patients/customers but, in my experience, most customers are supremely disinterested in who owns the pharmacy as long as the people who actually work in it are a) pleasant b)work hard and c)try their best to give a good service I understand there may be a concern that, if there is insufficient competition (and how, may I ask, do you quantify that?) there MAY (and I emphasise MAY) be a reduction in service level but that does assume the people providing the service don't want to be good. Yes, we all fall short on occasion but I don't believe anybody goes to work in the morning thinking "Today, I'm going to be rubbish at my job"

Amal England, Public Relations

You are right, nobody would go to work thinking I'm going to be rubbish at my job. But I've come across plenty of examples where staff are saying "have I got to come back to this rubbish Boots/Lloyds again tomorrow morning?" This kind of talk is very common in the big two but rare in the supermarkets. Further, i have personally heard people say they will not transfer to Lloyds, instead preferring to go on the sainsburys checkouts. I realise actions speak louder than words, but there is something about the big 2......i can't quite put my finger on it. ...but it made me quit working for them......maybe it's the fact that they systemically and indirectly make you feel that you are a rubbish robot. I don't know....can you put a finger on it?

Leon The Apothecary, Student

I'm particularly fond of their "inspire" weekly updates. Just call it KPIs.

Gerry Diamond, Primary care pharmacist

It will all go through anyway and make no difference to anybody in rank and file pharmacist roles except to make things even worse than they are.

Richard Buxton, Community pharmacist

Merger of Boots & Alliance had similar issues with the solution worked to divest approx 100 branches where lack of competition was seen as an issue. Day Lewis bought a fair chunk of these, and I'm sure there will be good interest again with this Lloyds situation.

Dave Downham, Manager

In other news, ursines have been discovered defecating in forested areas.

Paul Miyagi, Information Technology

There were calls for an investigation into the Boots take over by Stefano Pessina and his chums KKR, but funny how that got looked over ?? So why bother with this take over ?? Can't be any worse ?? ( can it ??? )

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