(Adds details on approval, background)
By Euan Rocha
TORONTO, March 21 Loblaw Cos Ltd,
Canada's largest grocer, said on Friday Canada's competition
watchdog has approved its C$12.4 billion ($11 billion)
acquisition of Shoppers Drug Mart Corp, the country's
biggest pharmacy chain.
The deal cements Loblaw's No. 1 position in Canada at a time
when competition from domestic retailers such as Sobeys and U.S.
retailers such as Wal-Mart Stores and Target is
To win approval from the Competition Bureau, Loblaw has
agreed to sell 18 stores and nine pharmacy operations. The
company said it does not expect any store closures as a result
of these divestitures.
Loblaw said it now expects the deal to close on March 28.
The majority of the stores and pharmacy outlets being sold
are in Ontario, but the deal will also result in Loblaw's sale
of stores in the Alberta, New Brunswick, Nova Scotia and other
In a separate statement, the Competition Bureau said that
during its analysis of the deal it identified conduct by Loblaw
with respect to its suppliers that could raise concerns under
Canada's Competition Act.
The agency said it determined that without restrictions on
certain Loblaw programs and agreements, the proposed transaction
would likely lead to higher wholesale prices for other retailers
and, in some circumstances, higher retail prices for consumers.
The bureau did not specify which supplier agreements it has
concerns about, but its approval of the Shoppers takeover
contains behavioural restrictions on certain Loblaw programs and
agreements on the supply of products for retail sale.
The agency said these restrictions will stay in place for as
long as five years from the date the deal closes.
The bureau said it will continue investigating all Loblaw
programs, agreements and conduct related to pricing strategies
and programs with suppliers that reference rivals' prices.
Loblaw said it will cooperate with the Competition Bureau
in its continued review of these practices.
Loblaw is majority owned and controlled by George Weston Ltd
, one of the Canada's largest producers of baked goods.
($1 = 1.1252 Canadian dollars)
(Reporting by Euan Rocha; Editing by Steve Orlofsky)