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OFT accepts undertakings instead of reference in Lloyds Pharmacy merger

123/07    23 August 2007

The OFT has decided today to accept the undertakings offered by Lloyds Pharmacy Limited (Lloyds) to address the competition concerns which arose from the acquisition by Lloyds of Independent Pharmacy Care Centres plc (IPCC). This transaction will now not be referred to the Competition Commission.

The transaction raised competition concerns in relation to the provision of pharmacy services in certain localities in the UK. In lieu of reference to the Competition Commission, the parties have offered divestments in the localities in question. The OFT considers that these proposed undertakings will clearly address the concerns identified in its decision of 8 June 2007.

Simon Pritchard, OFT Senior Director of Mergers, said:

'The loss of IPCC as a competitor would have led to a reduction in choice of competing community pharmacies in certain localities. We are content that the divestments offered by Lloyds will, when implemented, restore the number of competing pharmacies and resolve our concerns.'

NOTES

1. The Reference Test - the OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

4. Before accepting any such undertakings under Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the proposed undertakings and will consider any representations made in accordance with that notice. The full text of this decision will appear in the mergers section.

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