Loblaw Companies Ltd. has received approval from the Competition Bureau for its $12.4-billion purchase of Shoppers Drug Mart Corp., with a few stipulations.
The government agency says Loblaw will be required to sell 18 stores and nine pharmacies that operate inside Loblaw stores to an independent operator.
The combined retailer would operate approximately 2,738 stores and 1,824 pharmacies across the country.
Other "behavioural restrictions" will be placed on Loblaw over agreements with suppliers for up to five years. These restrictions are meant to prevent the big chain from forcing suppliers to offer it lower pricing that they give to other retailers
"The bureau determined that, without this consent agreement, Loblaw’s acquisition of Shoppers would likely have led to increased prices, decreased service, and less product variety and innovation," it said in its decision.
The Competition Bureau says it will continue to investigate certain pricing programs and agreements Loblaw has made beyond the five-year period.
Some suppliers have complained that the country's largest grocery chains use unfair practices, and have called for an industry code of conduct.
Loblaw says the transaction, which was announced in July 2013, is scheduled to close on March 28.
Shares of Loblaw rose $1.30 to $47.52 while Shoppers shares climbed 88 cents to $61.49.