The Australian Competition and Consumer Commission (ACCC) says it will not oppose Coles’ proposed acquisition of five Supabarn supermarkets in New South Wales and the ACT.
Coles originally proposed to acquire nine supermarkets from Supabarn, however, restructured the transaction after the ACCC expressed concerns that the proposed acquisition would be likely to substantially lessen competition. The five Supabarn supermarkets include Canberra Centre, Kaleen and Wanniassa in the ACT, and Five Dock and Sutherland in NSW.
ACCC Chairman Rod Sims said the ACCC’s review focused on two main issues. These were the effect of the acquisition upon competition between supermarket chains in the Canberra region and the effect upon each of the individual local markets in which the Supabarn stores operate.
“We received vocal feedback from members of the public that Supabarn is competitive and has a differentiated offer from that of the other major supermarket chains. This was borne out by our own analysis,” Mr Sims said.
“We were also concerned that the proposed acquisition, as originally structured, would have led to significant competitive harm in some of the local markets in the ACT and NSW. In these areas, Coles and Supabarn stores are located close together, and there is limited competition from other supermarkets.”
“However, the deal has since been restructured in a way that removes the most problematic stores, as well as two other stores of lesser concern. It also retains Supabarn as a supermarket chain after the acquisition is completed with Supabarn being free to compete under the Supabarn name,” Mr Sims said.
Peter Strong, CEO of the Council of Small Business Australia (COSBOA), told C&I Week the acquisition reinforces the failure of competition policy and “removes choice and retail diversity” for consumers.
Last month COSBOA launched a new campaign calling on the Federal Government to reform current competition laws to prevent the misuse of market power by major companies such as Coles and Woolworths.
The campaign ‘Let’s Compete: Change the Law’ launched with an online petition, and rolled out to independent retail stores across the country with instore posters and signage. Mr Strong said COSBOA will present the results of its petition to government next week.
Over the past six months the Australian Competition and Consumer Commission (ACCC) received almost 5000 complaints from small businesses. In its latest Small Business in Focus Report it was found that competition-related complaints, including misuse of market power, exclusive dealing and other competition issues, increased from 496 in 2014 to 639 in 2015 – an increase of almost 30 per cent. Of the 693 complaints, 262 were in relation to misuse of market power, up from 232 in 2014.