The CMA has launched a phase one merger inquiry into Pharmacy2U’s purchase of LloydsDirect, it announced yesterday (January 23).
The competition watchdog said that it is “considering” whether Pharmacy2U’s acquisition has created a situation that has or may lead to “a substantial lessening of competition within any market or markets in the UK for goods or services”.
According to NHS Business Services Authority (NHSBSA) data hosted on PharmData, Pharmacy2U and LloydsDirect were the top two pharmacies in the UK for items dispensed in October 2023, with Pharmacy2U dispensing 1.6 million items and LloydsDirect dispensing 1.15 million items.
Read more: UPDATED: Competition watchdog probes Pharmacy2U purchase of LloydsDirect
Previously, the CMA said that it was looking into the merger but that it had not yet “formally” begun its “phase one investigation”.
But according to the commencement notice also issued yesterday by the CMA, the watchdog has now acquired “sufficient information” to launch an investigation, which commenced yesterday.
This will determine whether the competition authority will “make a reference” for a phase two investigation, it said.
Read more: ‘A natural fit’: Pharmacy2U joins CCA following LloydsDirect takeover
The CMA is accepting comments from “any interested party” regarding Pharmacy2U’s purchase of LloydsDirect until February 6, it said.
Written comments should be sent to Pharmacy2ULloydsdirect@cma.gov.uk, it added.
The CMA’s “current statutory deadline” for a decision on its phase one inquiry is March 19, although this is subject to change, it said.
Pharmacy2U “confident”
A Pharmacy2U spokesperson told C+D today (January 24) that the acquisition “[brought] together complimentary businesses”.
“Both Pharmacy2U and LloydsDirect will fully collaborate with the CMA throughout the process and are confident that the CMA will decide to approve this transaction,” they said.
Read more: UPDATED: Pharmacy2U buys LloydsDirect for undisclosed sum
They reiterated that both brands will “run independently” until it “[receives] approval from the regulator”.
“We are committed to continuity and service excellence and our focus is on looking after our patients and our people,” they added.
C+D also approached Hallo Healthcare, LloydsDirect’s former owner, for comment.
Competition crunch
In November, C+D reported that the competition authority was looking into the “assets merger” of Pharmacy2U and LloydsDirect, after it served initial enforcement orders on Pharmacy2U, LloydsDirect, P2U Holdings Limited, G Square Capital II L.P. and G Square Healthcare Private Equity LLP.
In early October, Pharmacy2U’s purchase of LloydsDirect was announced in a joint statement posted on both companies’ websites – although a spokesperson for Pharmacy2U would not disclose how much the deal was worth.
Read more: Pharmacy2U 2021/22 financial results reveal 'dramatic' yearly increase
Later that month, the Company Chemists’ Association (CCA) announced that Pharmacy2U had joined as a member.
The large multiple association commented that Pharmacy2U is “strongly aligned with the CCA’s mission of enabling community pharmacy evolution” thanks to its “central ambition of supporting access to more convenient and sustainable NHS pharmacy services”.
