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Date of release: 30 September 2021
Subject to competition and public interest-related conditions, the Tribunal has approved the merger between Dis-Chem Pharmacies Ltd (“Dis-Chem”) and Pure Pharmacy Holdings (Pty) Ltd (“PPH”). Post-merger, Dis-Chem will own and exercise control over PPH.
Among the concerns that the conditions seek to remedy, the transaction could notably alter the structure of the national pharmaceutical retail market which has seen a growth in corporate-owned pharmacies and a decline in independents over the past five years.
The merger parties
Dis-Chem comprises a large number of pharmacy stores across South Africa’s major metros and suburbs. Through its subsidiaries, Dis-Chem is active along the pharmaceutical supply chain ranging from wholesale distribution and logistics to the operation of retail pharmacies. Dis-Chem pharmacy stores are licensed to provide scheduled and unscheduled pharmaceutical products, front shop goods and primary healthcare services through its clinics located in most of its stores. Dis-Chem wholly owns The Local Choice, a franchisor of numerous independent franchisee pharmacies in the retail pharmaceutical market.
PPH is a healthcare and pharmacy group. It is active in retail and wholesale distribution of scheduled and unscheduled pharmaceutical products and front shop products. Through its subsidiary, Pure Pharmacy Retail, PPH holds the retail pharmacy licenses for its Medicare pharmacy stores. Through Kok and Golach, it also holds the wholesale license that relates to its now discontinued wholesale distribution activities carried out under its Pharmasave brand. PPH also owned Healthforce which provides clinic practice management software with telemedicine functionality and a remote doctor network to serve clinic nurses via a video link.
Competition conditions
Open access and inter-operability of Healthforce:
The conditions seek to remedy concerns regarding the potential foreclosure of Dis-Chem competitors from accessing Healthforce. Therefore, for a period of five years from the merger implementation date, the merged entity must grant third-party pharmacies open access to the Healthforce Video Telemedicine Platform on fair, reasonable and non-discriminatory commercial and pricing terms.
The merged entity must ensure that the platform can be implemented in any third-party retail pharmacy (which meets minimum system requirements) and that electronic patient health records and telemedicine functionality is readily available. Patients who consult via the platform at any of the merged entity’s pharmacy stores cannot be prevented from filling their prescription at other pharmacies. In addition, medical practitioners who subscribe to Healthforce cannot be restricted from subscribing to competing platforms (this may exclude medical practitioners who are existing Healthforce employees).
Creeping mergers
For a period of five years from the merger implementation date, Dis-Chem undertakes to inform the Commission in writing of any “small merger” in terms of which it may acquire control over another entity in the pharmaceutical market.
Public interest conditions
The merged entity commits to use its reasonable endeavours to ensure that the aggregate employment level in the pharmacy stores within the merged entity does not decrease for a period of three years from the merger implementation date. Other than two categories of employees (as identified in the conditions), the merged entity may not retrench any employees as a result of the merger for a period of two years. In addition, the merged entity must give preference to any retrenched employees should there be future vacancies, provided they have the requisite qualifications, skills, know-how and experience. The merged entity must also endeavour to communicate vacancies to these employees.
Potential store closures
Dis-Chem must use reasonable endeavours to limit the closure of the target firm’s stores.
Local procurement
Dis-Chem must use reasonable endeavours to ensure that it maintains, and if possible, improves its current level of local procurement, including from Small Medium and Micro Enterprises (“SMMEs”) and Historically Disadvantaged Persons (“HDPs”). The conditions also require that Dis-Chem develops its South African supplier base and promotes local manufacturing. In addition, Dis-Chem must ensure that it increases its procurement spend on South African HDP controlled businesses to a specified percentage over a cumulative period of five years from the merger implementation date.
Supplier development
Dis-Chem must use reasonable endeavours to procure locally made products from its current and new SMME and HDP suppliers on reasonable commercial terms provided that such products meet the requisite industry norms and standards and comply with any regulatory requirements imposed on the specific products by law.
For a five-year period from the merger implementation date, Dis-Chem commits to:
  • provide up to 150 learnership opportunities to qualifying pharmacists’ assistants;
  • provide two bursaries for every new Greenfield Pharmacy store (newly opened stores) opened by the merged entity after the merger implementation date; and
  • provide internship opportunities to graduating pharmacists and full-time employment as fully qualified pharmacists’ post-community service. 
Issued by:

Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Cell: +27 (0) 82 410 1195
Twitter: @comptrib
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