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CMA investigation continues into Sainsbury’s pharmacy deal

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The Competition and Markets Authority is entering a new stage of its investigation into Sainsbury’s attempt to sell its pharmacies to Lloyds Pharmacy owner Celesio.

The deal, which was first announced in July, would see 277 Sainsbury’s pharmacies sold to Celesio for £125m. Celesio currently operates 1,542 pharmacies in the UK, making it the second largest pharmacy chain in Britain behind Alliance Boots. As such, the CMA fears that the deal could drastically reduce consumer choice and reduce competition.

At the start of December, the CMA said its investigation had not been able to reach a “positive conclusion on whether the merger gives rise to a realistic prospect of a substantial lessening of competition.”

The new phase of the investigation could cause severe delays on the deal, which Sainsbury’s had originally hoped would be completed in February.

“We continue to work closely with Lloyds Pharmacy during their discussions with the CMA. Both parties remain fully committed to the transaction and we continue to work towards a completion date of 29 February,” said a Sainsbury’s spokesperson.

Despite recent financial troubles, Sainsbury’s has performed relatively well compared to its Big Four rivals. For the 12 weeks leading up to 6 December, Sainsbury’s was the only Big Four chain to increase its sales, albeit marginally. 

However, CEO Mike Coupe is continuing his plans to re-evaluate the company’s less profitable ventures. The sale of Sainsbury's pharmacies is part of a re-assessment of the use of valuable floor space in its larger outlets.

Published on Tuesday 29 December by Philip Gallagher

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