The Competition and Markets Authority (CMA) has referred Celesio’s planned acquisition of Sainsbury’s pharmacy business for detailed scrutiny.
The watchdog said its decision to launch a ‘phase 2’ investigation came after Celesio failed to make acceptable undertakings to address competition concerns.
Sainsbury’s revealed in July that it would sell 281 pharmacies to Celesio, owner of LloydsPharmacy, for £125m and would receive annual rent payments for each location – the majority of branches are in the grocer’s stores.
Sainsbury’s said then that “customers will benefit from an enhanced pharmacy service delivered from Sainsbury’s stores with all the benefits of accessible parking, flexible opening hours and convenient locations”.
It was hoped that the deal would be completed by the end of February next year.
However the CMA identified 78 areas where consumers might be affected by diminished competition.
It said that in other locations it had been “unable to reach a positive conclusion on whether the merger gives rise to a realistic prospect of a substantial lessening of competition”.
The regulator warned earlier this month that it would refer the deal for an in-depth investigation unless it received “acceptable undertakings” from Celesio to address its concerns,.
Yesterday the CMA said: “Celesio has not offered any undertakings in lieu and the CMA will therefore now refer the merger.”
A deadline of June 13 2016 has been set for a final report from the CMA.