Press release – Merger of Pharmacy and Health (DAC) and Pharmacy Warehouse annulled

The Competition Appeals Tribunal upholds the Competition Authority's decision to annul a merger in the pharmaceutical market.

By decision No. 28/2006 As of 11 July, the Competition Authority annulled the merger of the pharmacy and dispensing companies DAC and Lyfjavers, as it was considered that it would distort competition and harm the public interest. DAC is the sister company of the pharmacy chain Lyfja og heilsa. The merger would have resulted in two pharmacy chains, Lyf og heilsa and Lyfja, having over 80% of all pharmacy retail in the country. The Competition Authority considered that Lyf og Heilsa shared a joint dominant position with Lyfja in the retail market for medicines. The Competition Authority assessed that the combined dominant market position of Lyf og heilsa and Lyfja enabled the companies to coordinate their behaviour in the market without having to take competitors or consumers into account. The companies would thus be in a position to limit competition and increase prices. Had the merger in question gone ahead, this situation would have become even more serious from a competition perspective.

DAC and Pharmacy and Health appealed the decision of the Competition Authority to the Competition Appeals Tribunal, which delivered its ruling today. No. 6/2006. The Appeal Board finds that it was demonstrated the merger in question would distort competition and that the Competition Authority was therefore right to annul it. The Appeal Board therefore confirms the decision of the Competition Authority.

There has been significant consolidation in the pharmacy market in recent years. The Competition Authority considers it very important that this merger was stopped, thereby preventing further monopolisation of this important market. Lyfjaver has been a strong competitor to the large pharmacy chains, focusing on offering medicines at low prices. The withdrawal of Lyfjaver from the market would have caused a significant disruption to competition and harmed the interests of those who need medicines. The Competition Authority also believes that the appeal board's ruling has considerable precedent value and could make it easier for the Competition Authority to combat harmful oligopoly in various markets in the country.

See the full judgment No. 6/2006.