Gehe bid referred to UK

MAGNUS GRIMOND

The European Commission yesterday referred scrutiny of the pounds 650m bid by Gehe of Germany for Lloyds Chemists back to the UK authorities. The bid now looks certain to be sent before the Monopolies and Mergers Commission, which is already looking at an earlier offer from UniChem, a rival British chemists chain.

In a statement, Karel van Miert, the commissioner in charge of competition policy, said Gehe-Lloyds and UniChem would have over two-thirds of the wholesale market to independent chemists following a merger and the market share would be "significantly higher" in certain regions. They would be the only two wholesalers operating in the whole of the UK and supplying a full range of pharmaceutical products.

"Based on the information currently available, regional wholesalers would appear unable to provide a sufficient competitive counterweight to the duopoly pair composed of Gehe-Lloyds and UniChem." The Commission said the present concentration threatened to create a dominant position in the wholesale market. On top of that, it had identified a small number of areas where local pharmacies owned by Gehe in the UK would appear to have a monopoly and with increased vertical integration there was a danger of a dominant position in retailing also being created.

The Commission noted that referral would have the advantage of allowing both bids to be scrutinised by the same authority.