Last March, the company DAC ehf acquired the pharmaceuticals distributor Lyfjaver ehf. DAC and Lyfjaver are engaged in the importation of pharmaceuticals and the dispensing of dosages for individual and institutionalised patients. In addition, Lyfjaver operates pharmacies which are in competition, among other things, with pharmacies owned by Lyf og heilsa hf., which belongs to the same consolidation as DAC.
In addition to the fact that DAC's acquisition of Lyfjaver constitutes a merger within the meaning of the Competition Act, it also involves a merger of Lyf og heilsa and Lyfjaver. By its decision of 11 July, the Competition Authority has annulled the merger.
In the absence of any measures, the anticompetitive impact of the merger would have been felt mostly in the retail market for pharmaceuticals and the market for patient dosing.
The pharmaceuticals market has undergone significant concentration in recent years. The merger would have had the effect that two retail pharmacy chains, Lyf og heilsa on the one hand and Lyfja hf. on the other, would have commanded over four-fifths of the country's pharmaceuticals retail market. In the opinion of the Competition Authority, Lyf og heilsa shares market dominance with Lyfja in the pharmaceuticals retail market. It is the opinion of the Competition Authority that the joint market dominance of Lyf og heilsa and Lyfja, as described in the Authority's decision, will enable the companies to co-ordinate their market behaviour without any need to consider competitors or consumers. This places the companies in a position where they can restrict competition and raise prices. Had the merger in question taken place, this situation would have been even more serious from the point of view of competition. The merger would have resulted in a significant distortion of competition to the detriment of the interests of persons who need pharmaceuticals.
In recent years, a separate market has been created where pharmaceuticals are packaged and sold in dosages, both for individual patients and patients in institutions. With the merger, the number of companies in this market would have been reduced from three to two. It is the opinion of the Competition Authority that the merger would have led to a dominant position for DAC in the dosing market and restricted competition. From this position, the company could have distorted competition and decided its pricing, services and business terms to a significant extent without consideration of competitors or customers.
