Loblaw-Shoppers deal given the green light

Loblaw Companies Ltd. has been given the green light from the Competition Bureau for its acquisition of Shoppers Drug Mart. In order to win the $12.4-billion purchase, Loblaw is required to sell 18 retail stores, mostly Shoppers Drug Mart (but also a few grocery stores) and transfer ownership of nine pharmacies within Loblaw stores to […]

Loblaw Companies Ltd. has been given the green light from the Competition Bureau for its acquisition of Shoppers Drug Mart.

In order to win the $12.4-billion purchase, Loblaw is required to sell 18 retail stores, mostly Shoppers Drug Mart (but also a few grocery stores) and transfer ownership of nine pharmacies within Loblaw stores to an independent operator.

As well the Competition Bureau said that it is imposing certain “behavioural restrictions” on Loblaw through temporary vendor relationship rules.

“This merger uniquely positions Loblaw to meet the most important consumer trends in the country, including urbanization and health and wellness,” said Galen Weston, executive chairman of Loblaw, in a press release. “In doing so, we will continue to deliver more choice, more value, and more convenience to Canadians.”

The merger would combine Loblaw, Canada’s largest grocery chain, with Shoppers, Canada’s largest drugstore chain. The combined retailer would operate a total of 2,738 stores and 1,824 pharmacies across the country, with annual sales topping $42 billion.

The acquisition has been in the works since July 2013, when Loblaw first proposed the merger. The bureau said it had since conducted an extensive review and concluded that without the agreement the acquisition would have led to increased prices and decreased services.

On top of Loblaw’s requirement to sell some of its locations, the Bureau made special note to outline some behavioural restrictions will be placed on Loblaw over agreements with suppliers for up to five years.

The Competition Bureau says it will continue to investigate certain pricing programs and agreements Loblaw has made.

Some suppliers have complained that the country’s largest grocery chains use unfair practices, and have called on an industry code of conduct.

Loblaw said it would “co-operate with the Competition Bureau in its continued review of these practices.”

In a statement, John Pecman, the commissioner of competition assured the Agreement addresses the most significant negative competitive effects of the merger. The agreement, he said, is meant to help consumers benefit from competitive prices in the retail sale of drugstore and pharmacy products in Canada.

The transaction is scheduled to close on March 28.

A full list of stores that Loblaw must sell, as well as the supplier-relationship rules, can be viewed in the Competition Bureau’s report here.

This story originally appeared in Canadian Grocer

Brands Articles

H&R Block focuses on expertise in new campaign

The brand replaces its long-running "Tax Pain" platform with new creative

The Hot Plate rebrands as THP

Toronto shop looks to expand beyond its origins as a food-marketing agency

Tennis Canada serves up a new brand and national campaign

Multi-media campaign from Revolution urges Canadians to "Live the Moment"

Loblaw eyes Target locations as it more than doubles Q4 profit

Grocery and pharmacy chain earns $247 million for the 13-week period ending Jan. 3

New Smarties box encourages consumer to count calories

New packaging allows consumers to parcel out the candies into healthier portions

Buick makes a comeback as it courts younger customers

"That's not a Buick" tagline and campaign is changing the way people view the brand

Taco Bell Canada keeps rewarding the social savvy

Campaign raises awareness of the Doritos Cheesy Gordita Crunch arrival in Canada

Millennial employees aren’t really that different

Despite the stereotype, this cohort wants what their parents wanted

What effect did Canada have on Target’s bottom line?

A 4Q loss on Canada pullout, but U.S. shows sales gain