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Australian regulator to probe Coles-Supabarn acquisition deal

RBR Staff Writer Published 22 June 2015

The Australian Competition and Consumer Commission (ACCC) will begin a public review of Coles’ proposed acquisition of Supabarn supermarkets as it is concerned that the deal may reduce competition in the market.

Coles

ACCC will call for submissions from consumers, suppliers, supermarket operators and other interested parties, as part of its review that is expected to begin next week.

Earlier this month, Coles announced plans to acquire nine Supabarn supermarkets in the Australian Capital Territory and New South Wales.

Through the review, ACCC will investigate each of the individual local markets where Supabarn stores operate, and any effect on grocery wholesaling and supply markets.

ACCC Chairman Rod Sims said: "The legal test which the ACCC will apply in considering the proposed acquisition is in Section 50 of the Competition and Consumer Act (2010). Section 50 prohibits acquisitions that substantially lessen competition in a market, or are likely to do so."

"The main indicator of a substantial lessening of competition is whether the acquisition would enable firms in the market to raise prices or reduce product quality (including service and choice) or innovation following the acquisition.

"Section 50 does not allow the ACCC to consider factors other than those related to competition. In particular, the ACCC cannot oppose a proposed acquisition because of its potential to impact on the character of a local area."

Supabarn, a privately-owned supermarket operator, owns and operates a number of stores in the Australian Capital Territory and New South Wales. It owns and operates four supermarkets in Canberra - Canberra Centre, Crace, Kaleen and Wanniassa - and is developing a fifth at Casey.

Most of Supabarn owned and operated stores are full-line supermarkets with store size similar to Coles or Woolworths.

Supabarn also has four independently owned stores which operate under the SupaExpress and Supabarn Express banners. However, these stores are not included in the proposed acquisition.


Image: Coles Supermarket Dee Why. Photo: courtesy of Mtowngenius / Wikipedia.