Anticipated (since completed) acquisition by Boots Group plc of Alliance Unichem plc

Affected market: Healthcare

No. ME/2134/05

Decision accepting a variation to undertakings given by Boots Group plc (now Alliance Boots plc) to the Office of Fair Trading pursuant to section 73 of the Enterprise Act 2002

BACKGROUND

By way of a decision of 6 February 2006 (pdf 718 kb) (the Decision) the OFT announced that, on the evidence available to it, the OFT believed that it may be the case that the above merger may be expected to result in a substantial lessening of competition in the supply of retail pharmacy services in certain localities in the UK.  For the reasons set out in the Decision, the OFT believed that there was a realistic prospect that the reduction in the number of pharmacy fascia in these localities would lead to reduced choice for consumers and a potential lessening of non-price competition.

On this basis, the OFT decided that the merger would be referred to the Competition Commission unless Boots Group PLC (Boots) gave suitable undertakings pursuant to section 73 of the Enterprise Act 2002 (the Act) to address the competition concerns arising from the merger.

Boots offered undertakings to divest certain pharmacies to a purchaser or purchasers to be approved by the OFT (the Original Undertakings pdf 628 kb).

On 25 May 2006, the OFT accepted the Original Undertakings in relation to the supply of retail pharmacy services in 96 localities.

On 31 July 2006 Boots acquired Alliance UniChem Plc and the merged entity was renamed Alliance Boots plc (Alliance Boots).

On 27 February 2007 Alliance Boots requested that the OFT vary the Original Undertakings, pursuant to section 73 and 92(2)(b) of the Act, in light of a change of circumstances in two of the local areas which were the subject of the Original Undertakings. Alliance Boots stated that new entry into two areas (listed in Annex A, Category B (3:2) to the Original Undertakings as (38) Manchester (Trafford) and (46) Prescot) removed any competition concerns in these areas [note 1].  Alliance Boots therefore requested that the Original Undertakings be varied to remove these two areas from Annex A of the Original Undertakings.

THIRD PARTY VIEWS

Following a consultation process ending on 16 March 2007 pursuant to Schedule 10 of the Act the OFT did not receive any responses that raised concerns about the proposed variation to the Original Undertakings.

DECISION

The OFT hereby accepts the variation to the Original Undertakings given by Boots as, in two local areas, the competition concerns identified in the Decision are no longer present.

This variation will take effect from 30 March 2007. The Original Undertakings shall continue to apply other than as amended by this variation.

Download full text of the Variation to Undertakings (pdf 50 kb)

NOTE

1. Entry into the local areas will change the reduction in fascia resulting from the acquisition by Boots Group plc of Alliance Unichem Plc from 3-2 to 4-3 in both Manchester (Trafford) and Prescot.

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