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Walgreens merger with Rite Aid may raise antitrust concerns

Mergers and acquisitions can bring a lot of changes for the companies involved, not only by virtue of combining resources and workforces, but also because of changes stemming from regulatory oversight. When companies which control a large percentage of the market stand to gain even more power and influence by means of an acquisition, regulators take notice and may raise objections to the proposed business plans.

A recent example of this is the proposed merger of Rite Aid with Walgreens. The deal is said to be worth $9.4 billion, and would make the largest drugstore chain in the nation even more powerful. The deal would actually make Walgreens a larger chain than its competitor CVS. Walgreens has said the deal will especially help it to take up more market space in the Northeast and in Southern California. 

Because of the increased market space, Walgreens expects to gain more business from health insurance companies and large employers, as well as more influence over government health programs. Walgreens has said, though, that it is prepared to divest itself of up to 1,000 stores if federal regulators so require. At present, Walgreens owns over 8,000 stores, while Rite Aid owns roughly 4,600.

It remains to be seen, of course, how federal regulators will assess the proposed merger. The central question, of course, is whether the merger would significantly decrease competition for competitors. In our next post, we’ll take a closer look at the merger review process, and why it is important for businesses to work with experienced legal counsel to navigate the process. 

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