ACCC Approves Sigma and Chemist Warehouse Merger with Conditions

Sigma, a pharmacy wholesaler and franchisor of brands like ‘Amcal +’ and ‘Discount Drug Store’, is merging with Chemist Warehouse, which also franchises and supplies its own stores, including ‘Chemist Warehouse’ and ‘MyChemist’.

ACCC Chair Gina Cass-Gottlieb said the merger is “unlikely to substantially lessen competition,” citing continued competition across all levels of the pharmacy supply chain. “Consumers will continue to have choice between smaller format stores and larger discount stores like Chemist Warehouse,” she noted.

The ACCC assessed the potential impact on pharmacy supply. Due to ongoing regulatory changes and Sigma’s commitments, the ACCC believes Sigma’s franchisees will retain commercial independence, unlike Chemist Warehouse’s existing franchise model.

Competitors like EBOS, API, and CH2, who also distribute PBS medicines, provide a strong market check on the merged entity. The ACCC found that pharmacies can switch wholesalers without significant barriers, and Sigma’s undertaking will make it easier for pharmacies in longer contracts to change suppliers if needed.

To address competition concerns, Sigma has committed not to enforce exit restrictions on its franchisees, will allow them to change wholesalers, and has agreed to protect data from pharmacies that switch.

According to Cass-Gottlieb, the ACCC found “no substantial lessening of competition,” including in pharmacy retail, as other pharmacy chains and supermarkets will continue to compete with Chemist Warehouse.

The ACCC also reviewed potential impacts on retail product supply. The agency found sufficient alternative channels for suppliers, including non-pharmacy retailers.