(Adds further details from paragraph 2 onwards) June 13...

(Adds further details from paragraph 2 onwards)

June 13 (Reuters) - Australia's competition regulator highlighted on Thursday potential competition concerns over Sigma Healthcare's (SIG) proposed merger with Chemist Warehouse Group to form an A$8.8 billion ($5.86 billion) entity.

The Australian Competition and Consumer Commission (ACCC) identified a range of preliminary competition concerns on the grounds that the proposed integration of the merged firm across the wholesale and retail level would limit competition in the country's pharmacy sector.

In December last year, Sigma said it would

merge

with privately owned pharmacy giant Chemist Warehouse Group, which will own 85.8% of the merged entity that will supply 1,000 Sigma-aligned pharmacies and own 600 Chemist Warehouse outlets.

"In particular, we are focused on how the newly merged company may have the ability and incentive to favour Chemist Warehouse stores or worsen terms to non-Chemist Warehouse banner stores, raising their costs and rendering them less competitive," ACCC Commissioner Stephen Ridgeway said in a statement.

($1 = 1.5013 Australian dollars)