Metcash gets green light for Superior Food Group acquisition

The ACCC will not oppose Metcash’s proposed acquisition of Australia’s third-largest food services distribution business, Superior Food Services.

Superior purchases a wide range of food products from suppliers and distributes them to food service businesses such as restaurants, cafes, hotels and clubs, petrol and convenience stores, and institutions such as hospitals.

Metcash is a wholesale distribution company, which supplies grocery and fresh foods to independent supermarkets and retailers. Metcash also operates Campbells, which also wholesales food and food adjacent products to retailers.

Metcash is the parent company of supermarkets IGA and Foodlands, with more than 1600 stores nationally. It is also the second-largest player in both the Australian liquor market and the Australian hardware market, with brands including IGA Liquor, Bottle-O, Cellarbrations, Porters Liquor, and in hardware, Mitre 10, Home Timber & Hardware, and Total Tools.

The ACCC’s review focused on how closely Metcash and Superior compete in the wholesale supply of food products to food service customers, how the acquisition may affect suppliers or increase Metcash and Superior’s buyer power, and the likely impact of the acquisition on prices, product range and quality.

“We conducted extensive market inquiries with customers, suppliers, competitors and industry associations. We ultimately found that the transaction would not be likely to substantially lessen competition,” ACCC Commissioner Stephen Ridgeway said.

Although both Metcash and Superior supply food products, market feedback indicates that they do not compete closely for customers.

Superior primarily sells and distributes products that are not suitable for direct retail sale, and Metcash does not have the product base to compete in any significant way for food service customers.

The merged entity will continue to be constrained in the supply of food service products by established competitors such as Woolworths-PFD Food Services and Bidfood.

“We found that Metcash and Superior make up a very small percentage of the overall demand from food suppliers, and that suppliers would continue to have many other alternative routes to market,” Ridgeway said.

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