The ACCC is seeking views on a proposed court-enforceable undertaking offered by Sigma Healthcare Limited (ASX: SIG) in relation to its proposed acquisition of Chemist Warehouse Group Holdings.
Sigma is one of the largest wholesalers of prescription medicines, over the counter and front of store products. Sigma is also a franchisor of pharmacies under banners including ‘Amcal +’ and ‘Discount Drug Store’.
Chemist Warehouse is a franchisor, wholesaler and distributor to pharmacies and retail stores under its brands ‘Chemist Warehouse’, ‘MyChemist’, ‘Ultra Beauty’, ‘My Beauty Spot’ and ‘Optometrist Warehouse’.
The ACCC published a in June 2024 which identified a range of preliminary competition concerns with the proposed acquisition, including at the retail level and the impact of the proposed integration that would result across the wholesale and retail level.
These concerns included the potential harm to pharmacies currently supplied by Sigma and the potential for Chemist Warehouse to access these pharmacies’ data in ways that damage competition.
In response to these preliminary concerns, Sigma has offered a court-enforceable undertaking that would require Sigma to:
- not prevent or hinder franchisees who entered into their franchising arrangements prior to 1 January 2024 from terminating their franchise agreements with Sigma, for a period of three years. Sigma will waive its right to recover contributions Sigma has made under its franchise agreements and future fees payable to Sigma if these franchisees choose to terminate their agreements.
- place restrictions on the collection, use and disclosure of confidential data and information from Sigma wholesale customers and franchisees for a period of three years.
- remain a participating pharmaceutical wholesaler under the Commonwealth Government’s Community Service Obligation (CSO) arrangements for at least five years. The CSO arrangements contain service standards and compliance requirements for wholesaling of prescription medicines to all pharmacies.
“We are now seeking feedback from stakeholders on whether the draft undertaking offered by Sigma may be capable of addressing the competition concerns arising from its proposed acquisition of Chemist Warehouse,” ACCC Chair Gina Cass-Gottlieb said.
The ACCC is continuing to investigate the impact of the proposed acquisition.
“While the ACCC is publicly consulting on this undertaking, this should not be interpreted to mean that this or any other form of undertaking will ultimately be accepted by the ACCC,” Ms Cass-Gottlieb said.
