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The Icelandic Competition Authority has made the decision to prohibit the merger of Lyf og heilsa hf. and Opna ehf.

10/25/2018

The Icelandic Competition Authority (ICA) has made the decision to prohibit the merger of Lyf og heilsa hf. and Opna ehf. Lyf og heilsa is a pharmacy chain that operates 30 pharmacies nationally under the names Lyf og heilsa and Apótekarinn. Lyf og heilsa is one of the biggest retailer for medicine in Iceland. Opna operates one pharmacy in in the town Mosfellsbær, Apótek MOS, which opened in July 2016. Before Apótek MOS opened there was only one pharmacy in Mosfellsbær, Apótekarinn, which as previously stated is operated by Lyf og heilsa. Apótek MOS and Apótekarinn are currently the only pharmacies in Mosfellsbær.

The ICA's investigation showed that the opening of Apótek MOS had a beneficial impact on competition in the area investigated, i.e. Mosfellsbær. Apótek MOS brought in a new concept of service that included a different kind of structure in the store and an increased assistance from the pharmacist to the customers in addition the that opening hours were longer than in the other pharmacy in Mosfellsbær. Consumers were satisfied about the new pharmacy and the competition from Apótek MOS had a significant impact on Apótekarinn in Mosfellsbær.

It has been established that Lyf og heilsa contacted the owner of Apótek MOS about potentially buying the company. If the merger would have been accepted, the competition between Apótek MOS and Apótekarinn in Mosfellsbær would be lost. The ICA investigated to what extent pharmacies in nearby towns provided competitive restraint on the pharmacies in Mosfellsbær. The ICA performed a survey amongst consumers in Mosfellsbær and also amongst pharmacists that operate pharmacies in the Capital area of Iceland. The investigation proved that competition in retail for medicine is localized. The investigation also proved that the location of a pharmacy has a big impact on the consumers' choice of pharmacy. Consumers choose to do business with pharmacies that are closest to health care centers or their homes. This applies specially for the elderly or when it is urgent for a customer to get medicine. Therefore a high proportion of costumers of the two pharmacies in Mosfellsbær live in the town. In addition, the next pharmacy is relatively far away. The ICA concluded that the merger would give rise to competition concerns and would cause harm to consumers. 

The suggestion for potential remedies to the merger put forward by the parties was not considered adequate. For that reason, the ICA made its decision prohibiting the merger.

 

 

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