Wholesale company Holland Pharma is allowed to acquire FACO
The Netherlands Authority for Consumers and Markets (ACM) has cleared the acquisition of FACO by Holland Pharma. Both Holland Pharma and FACO are wholesale companies trading in drugstore items. They supply their products to, among others, their own drugstore chains, D.I.O. and DA, as well as independent drugstores. ACM has concluded that drugstores and other stores will continue to have sufficient options for purchasing drugstore items.
Over the past few months, ACM conducted an extensive investigation into the wholesale market for drugstore products. After all, the two merging companies are important wholesale companies for independent drugstores. In addition, they each have their own drugstore chain. If a wholesale company’s market position became too strong, it could lead to higher prices and reduced service.
Will Holland Pharma be able to increase prices after the acquisition?
ACM has reached the conclusion that there are enough other wholesale companies where drugstores are able to purchase products, for example Vriesia and Unipharm. These two wholesale companies are also able to offer a complete range of drugstore items.
Furthermore, ACM has also come to the conclusion that it is not easy for Holland Pharma to raise prices. It will be difficult for DA, D.I.O., and independent drugstores to pass on such price increases to consumers. ACM’s investigation has revealed that, if they did, too many consumers would switch to a competitor such as Etos, Trekpleiser, or Kruidvat. These stores have a combined market share of over 80 percent of the drugstore market, and they do not rely on the wholesale market because they have their own purchasing organizations. Holland Pharma would thus lose too much sales, which would ultimately not be beneficial for Holland Pharma. That is why it is unlikely that it would be easier for Holland Pharma to raise prices after the acquisition.
Enough choice for consumers
Last June, ACM already came to the conclusion that consumers would still have enough choice after the acquisition: besides DA and D.I.O. stores, enough other stores and supermarkets will remain in the market that sell drugstore items as well. However, ACM also said that further investigation was needed into the state of the wholesale market. This investigation has now also been completed.