The Wesfarmers Ltd (ASX: WES) share price is falling on Friday despite being given some good news.
At the time of writing, the conglomerate's shares are down 1.5% to $52.56.
Wesfarmers share price lower despite acquisition update
The Wesfarmers share price is in the red this morning despite revealing that it has received confirmation from the Australian Competition and Consumer Commission (ACCC) that it will not oppose its proposed acquisition of Australian Pharmaceutical Industries Limited (ASX: API).
Wesfarmers notes that ACCC clearance was a condition precedent for the transaction. This brings the transaction a step closer to successfully completing around the end of the first quarter of the 2022 calendar year.
What did the ACCC say?
The ACCC advised that its review primarily focused on the markets for the retail sale of over-the-counter pharmaceutical and beauty and personal care products.
Positively for Wesfarmers, the regulator didn't see any issues with the transaction due to competition from the likes of Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW).
ACCC Commissioner Stephen Ridgeway explained: "Our investigation showed that there are many large and well-established retailers, including Chemist Warehouse, Woolworths and Coles, that will compete strongly with Wesfarmers after the acquisition in both the market for over-the-counter pharmaceutical products and the market for beauty & personal care products."
"We consider that API's competitors will continue to compete strongly with Wesfarmers after the acquisition," he added.
The ACCC also considered the impact that owning the Priceline Sister Club and 50% of Flybuys could have on competition. This includes whether the acquisition would reduce competition by incentivising and locking customers into shopping at Wesfarmers-aligned pharmacies and providing it with access to increased customer data.
Mr Ridgeway said: "Wesfarmers acquiring the Priceline Sister Club loyalty scheme will not have a lock-in effect on consumers in any market. We also consider the benefits obtained from the additional customer transaction data do not appear to be so strong as to result in a substantial lessening of competition from the acquisition. Customers generally do not only join one loyalty scheme, and major competitors to Wesfarmers after the acquisition will have, or could start, their own customer loyalty schemes."
