Acquisitions protocol less than ACCC desires

Published On 12/12/2012 | By Pam Cue | Consumer protection, Mergers

The ACCC has reached only limited agreement with one of the major supermarket chains, Coles (owned by Wesfarmers), regarding a voluntary streamlined notification and assessment protocol for small retail acquisitions.

The ACCC had proposed that Coles and Woolworths notify it of all proposed acquisitions in the grocery, liquor and hardware space. In exchange, the ACCC would establish a dedicated ‘supermarket squad’ to deal with the notified acquisitions and commit to clearing acquisitions in an accelerated timeframe.

However, following a six-month negotiation process, the ACCC announced last week that there had been limited take up of its proposal.

In particular, while Coles had agreed to a six month trial period for a streamlined protocol relating to acquisitions of single supermarket and greenfield sites, agreement was not reached with respect to acquisitions by Coles or Bunnings (also owned by Wesfarmers) in the liquor or hardware industries.

Woolworths did not reach agreement with the ACCC regarding a protocol for notifying acquisitions in any of the grocery, liquor or hardware industries.

ACCC Chairman Rod Sims labelled the result “disappointing”. Sims reiterated the ACCC’s commitment to closely scrutinising small retail acquisitions by the major supermarket chains, although noted that without the protocol, the process would “take longer…[and] be more painful.”

Reviewing local acquisitions by the major supermarket chains has been a priority area for the ACCC in recent times.

In a speech to the Committee for Economic Development of Australia in June 2012, Sims noted that “the ACCC is concerned to ensure that further acquisitions in local markets do not ultimately lead to retail or indeed wholesale industry structures that may adversely affect the competitiveness of these markets and reduce choice for consumers.”

This year alone, the ACCC has publicly reviewed nine proposed acquisitions by Woolworths in the grocery, liquor and hardware sectors. The ACCC issued a ‘Statement of Issues’ in six matters. Of these, two are currently under consideration, two were subsequently opposed* and one was withdrawn.

The ACCC has publicly reviewed three acquisitions by Coles, none of which were opposed.

* In one of these matters, Woolworths (through its subsidiary ALH Group Pty Ltd) had proposed to acquire 31 hotels and two takeaway packaged liquor retailers in NSW. In June 2012, the ACCC announced that it would oppose the acquisition of five sites and not oppose the remaining sites. Woolworths came back with a revised proposal to acquire two of the five opposed sites. The ACCC cleared the revised proposal.

Flickr / Kitschkitten / CB BY 2000

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About The Author

is a solicitor in the Competition Law and Regulatory Group at King & Wood Mallesons Sydney.

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