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ACCC clears the way for Wesfarmers to acquire Priceline parent

(Source: Bigstock)

The planned acquisition of Australian Pharmaceutical Industries (API) will not be opposed by the Australian Competition and Consumer Commission (ACCC) effectively clearing the way for the deal to proceed. 

API owns the Priceline retail business and its franchisor that distributes and operates independent Priceline pharmacies across the country. 

“API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector,” Wesfarmers’ MD, Rob Scott said earlier last year.

The ACCC focused its investigation on whether the proposed acquisition would reduce competition by locking in customers shopping at Wesfarmers pharmacies giving the company greater control of consumers’ data. Wesfarmers owns 50 per cent of Flybuys and the Priceline Sister Club and sells over-the-counter pharmaceutical and beauty & personal-care products at its Kmart, Target and Catch businesses. 

“Our investigation showed that there are many large and well-established retailers, including Chemist Warehouse, Woolworths and Coles, that will compete strongly with Wesfarmers after the acquisition in both the market for over-the-counter pharmaceutical products and the market for beauty & personal care products,” said Stephen Ridgeway, ACCC commissioner.

In talking with stakeholders, the ACCC found few concerns about potential market disruption because there are a large number of suppliers and retailers able to compete.

“We also consider the benefits obtained from the additional customer transaction data do not appear to be so strong as to result in a substantial lessening of competition from the acquisition,” said Ridgeway.

ACCC notes that Wesfarmers will be required to comply with the same laws and regulations as API regarding pharmacy ownership and location, and will have the same obligations as API under the Franchising Code of Conduct.

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