• 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

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