Woolworths Limited - possible bid for the Kingston (ACT) car park development site

Summary

Woolworths has sought informal clearance from the ACCC to enable it to participate in any future sale process for the Kingston (ACT) car park site.

Market definition

The ACCC considered the acquisition in the context of the following relevant markets:
- the local market for supermarket retailing in Canberra's inner south and the surrounding area. For the purposes of this assessment the market included those supermarkets within 5Km (by road) from the Kingston car park development site.
- the ACT/NSW market for the procurement of products sold in supermarkets by supermarket wholesalers.
- the ACT/NSW market for the wholesaling of products sold in supermarkets. (The ACCC noted that the geographic market for wholesaling may be broader, but in this case the competition analysis would be unchanged).

Competition analysis

The ACCC formed the view that the proposed acquisition was unlikely to substantially lessen competition in the relevant markets.

In relation to the local supermarket retail market, the ACCC noted that Woolworths does not presently operate a supermarket within 5km of the proposed store. Both Coles and Woolworths operate supermarkets at Woden Plaza, just outside the southern boundary of the relevant market, and these stores may be alternatives for some consumers, particularly those living further from Kingston. However, the closest large supermarket to the Kingston site is the Coles supermarket at Manuka. The ACCC considered that if it builds a supermarket at the Kingston site, Woolworths would face competition from this supermarket and, to a lesser degree, from other smaller supermarkets in the local area.

The ACCC considered the possibility that if Woolworths does not acquire the site, another supermarket operator may open a store at the site. Such an entrant may compete effectively and increase competition within the local market. However, the ACCC did not consider that the difference between the state of competition if Woolworths acquires the site and the likely level of competition without the transaction was sufficient to constitute a substantial lessening of competition.

In relation to the wholesale and procurement markets, the ACCC considered that the acquisition was unlikely to significantly alter the buying power of Woolworths or its competitors, and was unlikely to result in a substantial lessening of competition.