ACCC begins review into $8.8b Sigma-Chemist Warehouse deal

The competition regulator has started its review into Sigma’s $8.8 billion merger deal with private retailer Chemist Warehouse.

The deal announced in early December would catapult Chemist Warehouse onto the Australian Securities Exchange and propel it firmly into the top 200 listed companies in the country.

The Australian Consumer and Competition Commission is seeking submissions on the merger, with its investigation focusing on the impact on competition.

The ACCC wants to know how closely Chemist Warehouse and Sigma’s franchised community pharmacies compete and the impact of the deal on prices and service quality. It would also look at the impact on the wholesaling and distribution of products from manufacturers and to community pharmacies.

Chemist Warehouse has more than 600 bricks-and-mortar stores in Australia, including 37 in WA. The retailer — which also operates in New Zealand, Ireland and China — generates about 70 per cent of revenue from “front-of-store” sales including cosmetics, vitamins and other non-prescription items.

This compared to about 27 per cent of revenue generated from these items at rival retailers.

Submissions are due by March 28, with the ACCC potentially announcing its findings or a final decision on June 13.