The Commerce Commission yesterday cleared Sigma Company Limited to acquire Amcal Chemists Marketing Limited.
Commissioner Dr Kate Brown said that the Commission was satisfied that, should the proposed acquisition go ahead, Sigma would not acquire or strengthen a dominant position in any market.
Amcal is a co-operative that is owned by the 86 pharmacies that trade under the "Amcal" brand. It is a banner group that allows the individual member pharmacies to combine their buying power, and provides them with distribution, marketing and retailing support.
The proposal involves Sigma acquiring the 86 retail pharmacies' shares in Amcal. The pharmacies would not be acquired by Sigma and will retain their current ownership.
Sigma is an Australian company, which in New Zealand operates the "Pharmacycare" and "Guardian" pharmacy banner groups and owns wholesalers Russells Pharmaceuticals Limited and Pharmacy Wholesalers Wellington Limited.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply for a clearance, which the Commission will give if it is satisfied that dominance is not acquired or strengthened.
In this case, the relevant markets are those for the:
? provision of organisational services to retail pharmacies in New Zealand;
? wholesaling of prescription, restricted and pharmacy-only medicinal drugs in New Zealand; and
? retailing of prescription, restricted and pharmacy only medicinal drugs in localities in New Zealand.
About 300 of New Zealand's 993 pharmacies belong to banner groups. Pharmacies can withdraw from banner groups, join existing or form new groups or choose to belong to no groups.
In wholesale markets Sigma faces competition from other pharmaceutical wholesalers, importers who sell direct to pharmacies and manufacturers.
In addition, the Health Funding Authority (HFA) and Pharmac have considerable countervailing power. The HFA through negotiating pharmacy dispensing fees and Pharmac in respect of the wholesale prices of prescription medicines.
Media contact: Commerce Act Manager Geoff Thorn
Phone work (04) 498 0958
Communications Officer Vincent Cholewa
Phone work (04) 498 0920
Commission media releases can be viewed on its web site www.comcom.govt.nz
