Woolworths gets greenlight for majority stake acquisition in Petstock

The ACCC will not oppose Woolworths’ proposed acquisition of a 55 per cent controlling interest in Petstock.

The consumer watchdog has accepted a court-enforceable undertaking from Petstock to divest a package of sites and assets, including 41 retail stores, following the ACCC’s enforcement investigation into past acquisitions by Petstock.

Gina Cass-Gottlieb, Chair of the ACCC, said that after extensive consultation with market participants and a comprehensive review of the parties’ internal documents, data, and research, the ACCC considers Woolworths’ proposed acquisition of a 55 per cent interest in Petstock unlikely to substantially lessen competition.

“Market feedback indicated that specialty pet retail and grocery are distinct channels in the pet industry, and specialty pet retail stores have a very different product and service offering to supermarkets and discount department stores.”

The ACCC also concluded that it was unlikely that Woolworths could leverage its retail position in the specialty pet industry in an anti-competitive way.

Details around Petstocks acquisitions in the pet industry came to light when the ACCC commenced its review of the Woolworths’ proposed acquisition, and it was found that Petstock had completed a number of acquisitions that had not been notified to the ACCC.

“Petstock’s decision to make numerous acquisitions of this scale without notifying the ACCC demonstrates the limitations of Australia’s current merger regime. It relies on the goodwill of businesses to voluntarily notify the ACCC and await an outcome. Absent this goodwill, businesses may be able to amass scale through serial and non-notified acquisitions which may fly under the ACCC’s radar.

“The ACCC needs better laws to enable it to become aware of and properly scrutinise mergers before they occur, and to prevent those likely to substantially lessen competition. Consumers ultimately bear the risk that anti-competitive mergers will complete without scrutiny and increase prices, reduce quality or reduce service levels,” said Cass-Gottlieb.

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