The Tánaiste, Ms Harney, has cleared the €152.4 million (£120 million) sale of the Unicare chain of pharmacies to the German group, Gehe. The decision paves the way for Gehe to dominate the business in the Republic. The group also owns the second-largest pharmaceutical wholesaler in the State, Cahill May Roberts.
In the past year, Gehe has also acquired 17 outlets owned by the Crowley's and Ryan's chains.
The group is understood to have paid €127 million up-front for the chain of 29 pharmacies early in November. The deal is also understood to embrace a €25.4 million earn-out clause.
Because of its scale, the acquisition was referred by Ms Harney to the Competition Authority. In a statement yesterday, Ms Harney said the authority had recommended that the sale should proceed without conditions.
The authority has been critical of the low level of competition in the pharmacy business in the past.
Its report is thought to have argued that the introduction of a new dominant player in the market was unlikely to reduce competition because there was little or no competition in the first instance.
Days after the authority submitted its report to Ms Harney on January 29th, the Government moved to relax restrictions governing the allocation of State contracts to chemists.
While Gehe claimed the liberalisation was "very unfortunate", it said the move would lead to lower prices in the market.
The move was welcomed by the Competition Authority, which has long argued that the absence of competition meant there was no incentive to reduce prices.
But the Irish Pharmaceutical Union opposed the liberalisation, which means there will be no limits on the number of outlets which can manage State contracts.
The union has accused the Government of breaking an agreement and its members are protesting by refusing to accept new patients who require methadone to treat addiction to heroin.
The Government's decision followed advice from the Attorney General, Mr Michael McDowell SC, who said the 1996 Regulation was ultra vires.
Low levels of competition in the sector were criticised last year in a report by Organisation for Economic Control and Development.
