Metcash beats ACCC in legal stoush


Federal Court win opens way to purchase of Franklins from Pick n Pay

August 22, 2011

The Australian Competition and Consumer Commission (ACCC) has suffered a Federal Court defeat in its battle to stop grocery supply firm Metcash buying the Franklins chain.

The ACCC’s decision to pursue Metcash last November drew heavy criticism as the action was seen as focusing on competition concerns in NSW rather than nationally, where Coles and Woolworths dominate.

ACCC says the purchase would reduce competition by taking out Metcash’s closest rival in the NSW wholesale grocery supply market.

Metcash is the nation’s largest supplier of independent grocery retailers, while Franklins operates 80 corporate-owned and 10 franchised supermarkets in NSW.

"Our thorough review found that the proposed acquisition would have reduced the number of players competing to provide these services from two to one, effectively giving Metcash a monopoly on grocery wholesaling to independent supermarkets in NSW," former ACCC Chairman Graeme Samuel had said.

"Barriers to entry in this market are already high, making timely new entry of a competitor to Metcash unlikely if this transaction proceeds."

Samuel had said there were other buyers for Franklins, a position rejected by Metcash Chief Executive Andrew Reitzer and the ultimate owner of Franklins, South African grocery giant Pick n Pay Stores.

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