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Planned acquisition of several activities of Mediq by rival Brocacef requires further investigation

The Netherlands Authority for Consumers and Markets (ACM) has decided that the planned acquisition of the pharmacies and wholesale activities of Dutch company Mediq by rival company Brocacef must be investigated further.

Brocacef and Mediq have a large number of wholly-owned pharmacies and associated pharmacies (franchisees and partners) in the Netherlands. In addition, both Brocacef and Mediq run wholesale operations, supplying pharmacies, hospitals and care institutions with pharmaceutical products such as prescription drugs.

As a result of the planned concentration, Brocacef could obtain a strong position on both the retail market(s) for public pharmacies, and on the wholesale market for pharmaceutical products to hospitals.

Pharmacies

ACM’s preliminary investigation has so far revealed that, as a result of the planned concentration, pharmacies of Brocacef and/or Mediq in a large number of municipalities in the Netherlands could obtain such a strong position that competition may be significantly impeded. In these regions, the acquisition may lead to less choice for consumers, as ACM found indications suggesting that consumers are only to a limited extent willing to travel further to an alternative pharmacy. As a result of reduced local competitive pressure, pharmacies of Brocacef would then possibly have fewer incentives to maintain the quality of its service.

In addition, ACM has identified a risk that the concentration could lead to a situation where health insurers are simply unable to avoid Brocacef’s pharmacy chain when securing contracts for procuring pharmacy care. This could lead to health insurers, and consumers too, ending up paying more.

ACM wishes to conduct a further investigation into the acquisition’s effects on consumers and on the bargaining position of health insurers.

Wholesale

Hospitals prefer to buy their products as much as possible from a single wholesaler. This wholesaler often directly fulfills a major supporting role in, for example, inventory management. As yet, ACM’s investigation reveals that, after the concentration, only a limited number of wholesalers will remain that are able to provide hospitals with the full range of products they desire. Brocacef may thus obtain a strong position vis-à-vis the hospitals.

ACM wishes to investigate further whether this position could become too strong, and whether it could lead to less favorable terms and conditions for hospitals.

As a result of ACM’s decision, Brocacef will have to apply for a license with ACM. Once the license application has been received, ACM will have thirteen weeks to complete its follow-up investigation.