Loblaw Cos. Ltd. has agreed to sell off 10 Shoppers Drug Mart locations to satisfy concerns from regulators about the grocery and retail giant’s market power.
The sale partially fulfills a condition of Loblaw’s purchase of Shoppers Drug Mart for a $12.4-billion last year, a mega-merger that has combined the country’s largest grocery chain with Canada’s biggest pharmacy business.
As part of its review, the Competition Bureau highlighted 27 cities and towns across the country where Loblaw and Shoppers were multiple locations were concentrated, raising the spectre that the reduced competition would fan prices upward.
“Competition generally leads to lower prices for consumers, as well as more consumer choice, a wider range of service options and increased innovation,” the regulator said in a statement.
The federal agency says seven of the 10 locations approved for sale will be to independent pharmacists operating under the McKesson banner. The other three Shoppers locations will be sold to Pharmasave Drugs in Atlantic Canada.
The Shoppers Drug Mart stores to be sold are in Ontario, Alberta, Nova Scotia and Prince Edward Island.
Loblaw still needs to sell four other locations to gain the approval. It has sold a total of 14 stores and nine in-store pharmacies.
In addition to Shoppers Drug Mart, its main grocery store business and several other grocery banners, such as No Frills, Real Canadian Superstore and others, Loblaw also operates the clothing line Joe Fresh, real estate trust Choice Properties and financial services division President’s Choice Financial.