News & Trends - Pharmaceuticals
Wesfarmers’ proposed acquisition of API given the green light

Pharma News: The Australian Competition & Consumer Commission (ACCC) is supporting the proposed acquisition of Australian Pharmaceutical Industries (API) by Wesfarmers.
API is a retailer and wholesaler of pharmaceutical and beauty & personal care products. It owns the Priceline retail business and is the franchisor for, and distributes products to, independently owned Priceline pharmacies, the Soul Pattinson and Pharmacist Advice banner groups. API also owns the Priceline Sister Club customer loyalty scheme.
Wesfarmers is a conglomerate with substantial retail holdings. Its Kmart, Target and Catch businesses each sell a range of over-the-counter pharmaceutical and beauty & personal care products. Wesfarmers also shares joint ownership of Flybuys with Coles.
“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,” ACCC Commissioner Stephen Ridgeway said.
“We consider that API’s competitors will continue to compete strongly with Wesfarmers after the acquisition.”
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The ACCC also considered the potential effects on competition of Wesfarmers owning both the Priceline Sister Club and 50% of Flybuys.
The investigation focused on whether the proposed acquisition would reduce competition by incentivising and locking customers into shopping at Wesfarmers-aligned pharmacies and providing Wesfarmers with access to increased customer data.
“Wesfarmers acquiring the Priceline Sister Club loyalty scheme will not have a lock-in effect on consumers in any market,” Mr Ridgeway said.
“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. Customers generally do not only join one loyalty scheme, and major competitors to Wesfarmers after the acquisition will have, or could start, their own customer loyalty schemes.”
Wesfarmers managing director Rob Scott said last year that the acquisition would provide the company with an “attractive opportunity” to enter the growing industry.
“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,” he said.
Prior to Wesfarmers’ bid to purchase API, Sigma had submitted an indicative proposal to acquire API but later withdrew the proposal. During the ACCC’s consideration of Wesfarmers’ proposed transaction, Woolworths also submitted and subsequently withdrew an acquisition proposal for API.
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