Uniphar's share of the pharmacy buying group market would have increased from 10-30% to 70-80%, if it had been allowed by the competition regulator to proceed with its proposed takeover of NaviCorp, the Competition and Consumer Protection Commission (CCPC) found.
While the drug distribution company’s share of the pharmacy common management and branding market (CMB) would have risen from 40-50% before the proposed transaction, to 60-70% had it completed the merger.
The CCPC blocked the proposed deal last December, after it found it would substantially lessen competition in markets for such services here.
It was the first time that the CCPC prevented a deal from proceeding since it was set up in 2014 through the amalgamation of the Competition Authority and the National Consumer Agency.
Prior to that it was 2008 when the Competition Authority last blocked a deal, although mergers have previously been abandoned prior to a formal decision, after parties involved saw the assessment from the regulator.
During its probe of the planned merger, the CCPC had particularly focused on the effects it would have on the market for the provision of buying group services in the State.
These are businesses or groups who negotiate on behalf of member pharmacies discounts and supply terms with multiple suppliers of pharmaceutical products, including manufacturers and wholesalers.
It was also worried that competition in the provision of common management and branding (CMB) services would be reduced.
These are services provided by pharmacy symbol or franchise groups and include common branding.
They may also include services such as store design, marketing, business intelligence and reporting, procurement, HR management, IT management and accounting.
In its final written determination on the case, published by the CCPC today, the watchdog said it was its view that the merger would have resulted in a significant increase in Uniphar’s market power and a substantial lessening of competition in both affected markets, where Navi is currently a close competitor.
It found the effect of the deal would be to reduce the number of suppliers of buying group services from four to three, with one of the remaining competitors having a very small market share.
"The Commission has found that the market for the provision of buying group services is already highly concentrated, and that on the basis of the evidence available to the Commission, the effect of the Proposed Transaction would be to substantially increase concentration," it said.
It added that the proposed Transaction would result in Uniphar having the largest share using either a trade value of purchases measure or a membership numbers measure.
The market structure, it said, would be one where the leading two businesses, Uniphar and United Drug, would collectively have almost the entire market, with the only other remaining competitor having a small slice.
It also found that with the completion of the proposed plan, customers of the two firms would have few alternative suppliers to switch to.
The result, it said, would be a likely increase in the price pharmacies pay for medicines, as well as an increase in the price pharmacies pay to join buying groups.
There would also be a likely reduction in quality, service and innovation and a loss of a key competitor, with no realistic prospect of a an effective new entrant any time soon.
While in relation to concerns of the effects the deal might have on the common management and brand market, the CCPC found it would reduce the number of providers of such services from four to three, in a market where the third competitor, Pure, has a market share of just 0-10%.
"The market for the supply of CMB services is already highly concentrated, and that on the basis of the evidence available to the Commission, the likely effect of the Proposed Transaction would be to substantially increase concentration," it said.
It added that following the deal, Uniphar would have the largest share of the market based on membership numbers, while the market structure would be one where the leading two businesses, Uniphar and CommCare, will collectively have almost the entire market.
This would also lead to the price pharmacies pay to join symbol groups rising, as well as a likely reduction in quality, service and innovation.
A key competitor would be lost, it added and there would be no realistic likelihood of a new entrant coming into the market in a timely manner.
