Metcash granted approval to finalise takeover of financially-stricken supermarket chain Franklins, but ACCC wins right to appeal
By Brad Gardner | September 21, 2011
Metcash has been given the go-ahead to take over the financially-stricken Franklins supermarket chain, but the competition regulator will get its day in court to appeal the deal.
Federal Court Justice Peter Jacobson threw out the Australian Competition and Consumer Commission’s (ACCC) bid for an injunction on the $215 million sale of Franklins’ 85 NSW stores until an appeal had been heard.
Relying on a “graphic” affidavit from Franklins Acting Managing Director Ronald Perlov, Jacobson ruled that the poor state of the supermarket business outweighed the ACCC’s competition concerns.
“I think it is fair to say that the picture painted by Mr Perlov of the business operations of Franklins, both now and in the immediate future, is not a bright one,” Jacobson says.
“Accordingly, I cannot assume that Franklins’ current business operations will continue in their present form for the duration of the relevant appeal period even if I were disposed to grant an injunction.”
In his affidavit, Perlov says the financial position of Franklins has worsened as the ongoing delays in the deal with Metcash continued. Pick n Pay, which owns Franklins, struck a deal with Metcash in July last year to sell the business but the ACCC has opposed the buyout at every turn.
Jacobson says it is likely Pick n Pay might pursue other sale options if an injunction is granted, meaning “the status quo is unlikely to be preserved until the determination of the appeal”.
“That is a strong factor to be weighed in the balance against the grant of interim relief,” he says.
The appeal has been expedited to October 24, with Jacobson saying Pick n Pay’s desire to cease operations in Australia should not be delayed any further.
Following yesterday’s ruling, ACCC Chairman Rod Sims says the regulator was committed to the appeal process, which will be held over three days.
The Federal Court last month ruled in favour of Metcash and found that its planned takeover would be pro-competitive.
