On 30 November 2011, the Full Federal Court dismissed the Australian Competition and Consumer Commission’s appeal against Justice Emmett’s decision on Metcash’s acquisition of the Franklins supermarket business.
“The ACCC has carefully reviewed the Full Federal Court’s decision in the Metcash matter and decided that it will not seek special leave to appeal to the High Court,” ACCC chairman Rod Sims said.
The ACCC took action to block the proposed acquisition by Metcash of the Franklins supermarket business because it considered that such an acquisition was likely to result in a substantial lessening of competition in the wholesale supply of packaged groceries to independent retailers in NSW and the ACT. The ACCC accepts that the Federal Court has ruled that this was not established on the evidence before the court.
In addition, the ACCC appealed the initial decision in order to clarify some of the principles relating to merger analysis under section 50 of the Competition and Consumer Act 2010 that were raised by aspects of Justice Emmett’s judgment.
“The ACCC agrees that in relation to any acquisition, it must consider the likely effect on competition, based on commercially relevant facts, assessments and evidence and not speculative possibilities,” Mr Sims said.
The ACCC notes the comments by the court relating to what is sometimes referred to as the “counterfactual” analysis, or comparison of the likely future state of competition both with and without the acquisition. Such an analysis will continue to be one of the tools available to the ACCC in its assessment of the likely competitive effect of an acquisition, to be considered in the context of the market facts.
“Although not conclusively determined by the Full Court on this occasion, the ACCC considers that there is strong judicial support for the view that “likely” means a “real chance”. The ACCC will continue to assess the likely competitive effect of an acquisition on the basis of a “real chance” test," Mr Sims said.