Dischem Pharmacies Limited v Pure Pharmacy Holdings Proprietary Limited (LM181Jan21) [2021] ZACT 70 (19 October 2021)

Dischem Pharmacies Limited v Pure Pharmacy Holdings Proprietary Limited (LM181Jan21) [2021] ZACT 70 (19 October 2021)

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant pharmaceutical markets, as the market share accretions were low and effective competitors would remain post-merger. Although the transaction reduced the number of independent pharmacy groups, Pure Pharmacy Holdings was not considered an effective competitor due to its financial challenges and inability to constrain Dis-Chem. The Tribunal accepted the Commission's conditions, including mandatory notification of future small mergers and open access to the Healthforce platform, to address concerns about creeping mergers and continuity of healthcare services. Public interest...

Citation
[2021] ZACT 70
Parties
Applicant: Dischem Pharmacies Limited; Respondent: Pure Pharmacy Holdings Proprietary Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
19 October 2021
Case Number
LM181Jan21
Procedural Posture
Large Merger Review / Conditional Approval
Outcome
Merger conditionally approved subject to annexed conditions.
Judges
Enver Daniels, Yasmin Carrim, Imraan Valodia
Legal Topics
Horizontal Merger, Vertical Merger, Market Concentration, Creeping Merger, Failing Firm, Public Interest Retrenchment
Competition Law Commercial and Corporate Horizontal Merger Vertical Merger Market Concentration Creeping Merger Failing Firm Public Interest Retrenchment

Case Brief

Summary, issues, holding and outcome

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Parties

Dischem Pharmacies Limited

Applicant

Pure Pharmacy Holdings Proprietary Limited

Respondent

Procedural Posture

Large Merger Review / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger between Dis-Chem and Pure Pharmacy Holdings would substantially prevent or lessen competition in the relevant markets.
  2. 2 Whether the transaction would negatively affect public interest, including employment and access to healthcare.
  3. 3 Whether the merger constitutes a creeping merger strategy by Dis-Chem.

Ratio Decidendi

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant pharmaceutical markets, as the market share accretions were low and effective competitors would remain post-merger. Although the transaction reduced the number of independent pharmacy groups, Pure Pharmacy Holdings was not considered an effective competitor due to its financial challenges and inability to constrain Dis-Chem. The Tribunal accepted the Commission's conditions, including mandatory notification of future small mergers and open access to the Healthforce platform, to address concerns about creeping mergers and continuity of healthcare services. Public interest...

Court Disposition

Merger conditionally approved subject to annexed conditions.

Orders

  • The merger between Dis-Chem Pharmacies Limited and Pure Pharmacy Holdings Proprietary Limited is approved subject to the conditions annexed to the order.
  • Dis-Chem must notify any small merger in which it acquires control over another entity in the pharmaceutical market for a period of five years.