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Zuellig Pharma Cleared To Acquire Sigma NZ Assets

Issued 2 February 2001/11

Commission Clears Zuellig Pharma Limited To Acquire Sigma NZ Assets

The Commerce Commission has cleared Zuellig Pharma Limited to acquire all the assets currently owned by Sigma NZ Limited.

Both companies have interests in pharmaceutical markets in New Zealand at the distribution, wholesaling and hospital supply levels. Zuellig also has interests in the "Unichem" banner group and the "Vantage" buying group, while Sigma NZ has interests in the "Amcal", Guardian", and "Pharmacycare" banner groups and the "PPS" buying group.

If the proposed acquisition were to proceed, market aggregation would arise in the following markets:

* the wholesaling of prescription and over the counter (OTC) pharmaceuticals in each of the upper North Island, the lower North Island and the South Island; * the national market for the distribution of prescription and OTC pharmaceuticals; and * the national market for the provision of organisational services to retail pharmacies.

Chairman, John Belgrave said the Commission was satisfied that in each of these markets, sufficient competitive constraint would exist from other market participants to prevent a combined Zuellig/Sigma NZ from raising its prices above a competitive level, or reducing its service or quality.

The Commission found that there was at least one other competitor in each of the three geographic wholesaling markets. In addition, the Ministry of Health and PHARMAC have considerable countervailing power.

The Commission was also satisfied that any linking of Zuellig's and Sigma NZ's activities in the identified markets would not raise any dominance issues.

Background

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market.

Parties can apply for a clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened.

A clearance, if granted, protects an acquisition from court action under the Act.


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