The Latvian competition authority, known as the Competition Council, has evaluated the acquisition of a pharmacy in Mālpils by AS SENTOR FARM APTIEKAS (SENTOR). They found that this merger resulted in a temporary elimination of competition in the local retail drug market.

By acquiring the pharmacy from SIA MURJĀNIS, SENTOR, which already owns the largest pharmacy chain in Latvia, became the sole provider of retail drug services in Mālpils, capturing 100% of the local market. Following the acquisition, SENTOR ceased operations at the purchased pharmacy, leading to a complete lack of competition in the area.

The Competition Council received information about the license transfer from MURJĀNIS to SENTOR from the State Agency of Medicines. They requested clarification from SENTOR regarding the nature of the transaction and whether it should have been reported or assessed under competition law, which allows the authority to evaluate mergers that do not meet mandatory notification criteria.

SENTOR argued that the transaction did not require mandatory notification and indicated that the pharmacy license obtained was suspended. They also mentioned that the pharmacy had already been sold to another market participant.

Considering these circumstances, the Competition Council acknowledged that the merger could have posed significant competition risks and that they would have had the right to assess the merger and demand remedial actions, such as the sale of the pharmacy. However, they deemed such actions unnecessary this time, as competition in the market had already been restored.

This case serves as a reminder that even small, local mergers can lead to the disappearance of competition and significantly reduce consumer choices. It also highlights the practice of stronger market players acquiring smaller competitors with the intent to close them down rather than develop them. Such transactions can negatively impact local markets, especially in small communities where only a few businesses operate.

The Competition Council urges companies to carefully evaluate transactions, even if they seem small or locally significant. If there are doubts about whether a transaction could affect competition, they encourage timely consultation with the authority. Residents are also encouraged to report instances where only one pharmacy or gas station remains in a village or town, as these seemingly minor events can have a substantial impact on service and product prices and quality.