Metcash disappointed, but ACCC to appeal

The ACCC is appealing a Federal Court decision granting Metcash the right to take over the Franklins supermarket business

September 12, 2011

Metcash’s protracted bid to acquire the Franklins supermarket business will drag on a little longer after the competition watchdog announced it would appeal a Federal Court decision granting the takeover.

The Australian Competition and Consumer Commission (ACCC) last week announced it would continue its fight to stop Metcash from swallowing Franklins.

It claims the deal will negatively affect consumers and competition in the NSW and the ACT grocery sector.

ACCC Chairman Rod Sims claims Metcash, which launched its bid for Franklins in July last year, will have the power to increase prices and reduce services to independent supermarket retailers.

He also claims the Federal Court decision, if left unchallenged, could have "serious implications" for the ACCC’s ability to block future anti-competitive mergers.

Metcash says it is disappointed by the ACCC’s decision to appeal and cites the Federal Court ruling that concluded the takeover would likely increase the ability of independent retailers to compete with their larger counterparts.

However, the ACCC claims the court committed significant legal and factual errors in dismissing its case. The agency sought an injunction in December last year to prevent the deal between Metcash and Interfrank Group Holdings, which owns Franklins, from going ahead.

The ACCC believes Franklins is Metcash’s only real competitor for the wholesale supply of packaged groceries to independent retailers in NSW and the ACT.

"We remain concerned that the proposed acquisition would remove any future ability for those independent retailers to choose from whom they get their grocery supplies," Sims says.

"We have had a number of submissions from independent retailers and others that competition to Metcash at the wholesale level is necessary for them to control the cost of their goods."

The ACCC says the acquisition of Franklins will remove the only option for independent retailers who are unhappy with what Metcash offers them.

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