Metcash Trading Limited - proposed acquisition of SSA Holding Pty Ltd

Summary

Metcash proposed to acquire SSA Holding Pty Ltd (trading as Scanning Systems Australia).

Market definition

The ACCC did not consider it necessary to form a concluded view in relation to market definition with respect to point of sale (POS) systems. For the purposes of the competition analysis, the ACCC analysed the likely impact of the proposed acquisition in a national market for the supply of retail POS systems.

The ACCC also assessed the likely impact of the proposed acquisition in the context of the following markets:

- state-based markets for the wholesale supply of packaged groceries to independent supermarket operators;

- state-based markets for the wholesale supply of fresh produce to independent supermarket operators;

- state-based markets for the wholesale supply of packaged liquor for subsequent sale in retail markets for off-premises consumption; and

- regional markets for the wholesale supply of hardware and home improvement products to retailers.

Competition analysis

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

While there was no horizontal overlap between the wholesaling operations of Metcash and the supply of retail POS systems by SSA, the ACCC considered whether the proposed acquisition may raise conglomerate issues.

In particular, the ACCC investigated the extent to which the proposed acquisition may result in Metcash having the ability and incentive to foreclose competing vendors from supplying retail POS systems to retailers supplied by Metcash. In particular, the ACCC considered whether Metcash would have the ability and incentive to engage in exclusionary bundling or tying, or other exclusionary conduct such as limiting existing POS vendors access to file specification data. The ACCC considered that Metcash is unlikely to have sufficient incentive to engage in strategies to foreclose competing POS vendors from supplying its wholesale customer base. The ACCC had regard to the disproportionately small benefits which may accrue to Metcash as a result of increasing retail POS system revenues relative to the potential risk to Metcash's significant wholesale revenues which may arise from disruptions to retailers' operations. In addition, the ACCC had regard to competing POS vendors, such as Worldsmart, which have a significant presence in the market for the supply of retail POS systems. The ACCC considered that such competing POS vendors are likely to continue to provide a competitive constraint upon pricing and innovation of retail POS systems.

The ACCC also considered the extent to which Metcash may be able to gain access to commercially sensitive information. In particular, the ACCC investigated the extent to which commercially sensitive data of other wholesalers and/or retail groups which supply existing customers of SSA may be accessed by the merged entity. The ACCC considered that existing customers of SSA which obtain wholesale supply from competitors of Metcash are able to implement safeguards to limit access to commercially sensitive data or otherwise switch to alternative POS vendors.