Woolworths Limited - proposed acquisition of Food Rite Supermarket and Liquor Licence in Emerald

Acquirer(s)

  • Woolworths Limited

Target(s)

  • Food Rite Supermarket and Liquor Licence in Emerald

Summary

Woolworths Limited proposed to acquire the Food Rite Supermarket in Emerald, Victoria. Woolworths also proposed to acquire the associated take away packaged liquor business.

Market definition

The ACCC considered the acquisition in the context of four types of markets:
* local markets for supermarket retailing
* local markets for liquor retailing
* A state-wide market for the wholesale supply of groceries to supermarket retailers
* A state-wide market for the wholesale supply of liquor to liquor retailers

In terms of the local markets listed above, the ACCC noted the semi-rural nature of the Emerald area and its impact on consumer travel patterns and on the distance driven to supermarkets. Therefore the ACCC considered the competition effects of the transaction on the basis of several different possible geographic areas for these local markets, including a 3-5km drive distance from Emerald, a 10-12km drive distance from Emerald and a 20-30km drive distance from Emerald.

Competition analysis

In relation to the grocery and liquor state-wide wholesale markets, the ACCC did not consider that the acquisition raised competition concerns, particularly given the small size of the Emerald store being acquired.

In relation to the local supermarket retailing and local liquor retailing markets, the ACCC did not consider that the proposed acquisition would be likely to substantially lessen competition. In reaching this view, the ACCC had regard to:
* The relatively limited turnover of the store being acquired and market inquiries which suggested the store was not a vigorous competitor;
* The relative strength of the other supermarket in Emerald, a Ritchies Supa-IGA store;
* The lack of any existing Woolworths stores in Emerald;
* The availability of land for sites in Emerald;
* The shopping habits of Emerald local residents revealed during market inquiries; and
* The likely level of competition should Woolworths not acquire the Emerald store.

The ACCC did have careful regard to the fact that Woolworths operates many supermarkets in local regional centres, such as Monbulk and Belgrave, but did not consider that the acquisition would substantially lessen competition in any relevant markets.

Timeline

DateEvent
18/08/2008ACCC commenced review under the Merger Review Process Guidelines.
05/09/2008Closing date for submissions from interested parties.
09/09/2008ACCC announced it would not oppose the proposed acquisition.