The Australian competition watchdog has given the go-ahead to South African-based Aspen Pharmacare Holdings to buy Sigma Pharmaceuticals Ltd (ASX:SIP) pharmaceutical's division for $900 million.

The Australian Competition and Consumer Commission (ACCC) said today it will not oppose the proposed acquisition of Sigma's pharmaceutical division by Aspen on the basis that Aspen is providing an undertaking to sell certain brands to address the ACCC's competition concerns.

"The ACCC is satisfied, taking into account the divestiture undertaking by Aspen to sell certain pharmaceutical brands, that the proposed acquisition is unlikely to substantially lessen competition," ACCC chairman Graeme Samuel said.

In Australia, Aspen and Sigma's Pharmaceutical Division compete in a number of pharmaceutical markets, including in the supply of various prescription generic medicines and over-the-counter pharmaceutical products.

"The ACCC conducted an extensive review to assess the impact of this transaction on customers of pharmaceutical products, which include the Federal, State and Territory governments, pharmacists and patients and identified a number of pharmaceutical markets where competition concerns were raised," Mr Samuel said.

"The proposed acquisition would remove the only competitor to Aspen in a number of pharmaceutical markets. Without the proposed divestitures, Aspen would become the sole supplier in these pharmaceutical markets."

In response to the ACCC's preliminary concerns outlined in a statement of issues published on October 27 this year, Aspen and Sigma agreed that Sigma's iron polymaltose product, Ferrosig, would no longer be included in the proposed transaction.

To address the remaining concerns Aspen is providing a court enforceable undertaking that would require certain pharmaceutical brands to be divested.

Following the ACCC's consultation on the proposed undertaking, it was satisfied that the competition concerns in the relevant markets would be remedied through the sale of Sigma's Sone brand containing prednisone, Solone brand containing prednisolone and Aspen's LPV brand containing phenoxymethylpenicillin.

The ACCC concluded that there were no competition concerns in other pharmaceutical markets in which the operations of Aspen and Sigma's Pharmaceutical Division overlap.

In October, the ACCC delayed its ruling when it raised concerns that Aspen's purchase of Sigma's generics business would eliminate the only competitor in the market for some of its drugs.