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Proposed Coles acquisition of three WA Supa IGA stores unopposed by ACCC

The Australian Competition and Consumer Commission has announced today that it will not oppose the proposed acquisition of three Progressive Supa IGA supermarkets by Coles/Wesfarmers (see ‘Coles seeks clearance to buy 4 IGA stores & beef up WA presence’ C&I WEEK 24 April 2014).

“The ACCC noted community concerns that the proposed acquisition would remove Progressive’s differentiated offering from the local areas,” ACCC Commissioner Dr Jill Walker said, noting that in each of the local markets around the stores, consumers were able to access at least one large competitive independent offer in addition to Woolworths. Further, “The ACCC also took into account information that suggested that Aldi would be likely to enter some of the relevant markets in the coming years as part of its expansion into Western Australia,” Dr Walker said.

The ACCC analysed the competitive dynamic that would likely exist if the acquisition by Coles does not proceed, noting the decline in sales at the Progressive stores and the potential for the stores to be closed without the acquisition. The ACCC also noted Metcash’s willingness to sell the stores, despite the fact that Metcash will lose grocery sales at the wholesale level. (Metcash Limited holds a 45% interest in the Progressive supermarkets.)

For these reasons, the ACCC concluded that the proposed acquisition of these three stores is not likely to result in a substantial lessening of competition in the relevant local markets for supermarket retailing.

The ACCC has also considered Coles’ proposed acquisition of the Progressive Supa IGA supermarket in Busselton. Coles has not sought an ACCC view on the Busselton acquisition at this time, as it is seeking to provide further information to the ACCC. The ACCC will reconsider Coles’ proposed acquisition of the Busselton supermarket when this information is received.

Meantime, 7-Eleven has announced that the first of the 75 Western Australian stores planned over the next five years will open in Fremantle on 30 October.

 

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