UK And EU At Odds Over Lloyds Bid

The European Commission seems in a quandary over the UK government's request that it be sole judge of the proposed takeover of Lloyds Chemists by Gehe of Germany (see page 4). Lawyers in Brussels say that if the Commission refers the deal to the UK Monopolies and Mergers Commission, this would hamper efforts to remove cross-border trade barriers in the pharmacy sector, which the UK purportedly supports.

Gehe's bid was notified to the European Union competition authorities in early February, but the UK has asked for "sole jurisdiction." as it has the right to do under EU merger regulation 4064/89. It argues that the deal raises concerns over competition, especially as Gehe already controls 30% of the UK wholesale drug market. This view is backed by the fact that the rival bid for Lloyds, from the UK's UniChem, is to be assessed by the MMC.

The Commission must now consider if the relevant markets are European or are fragmented along national lines.