Woolworths Limited - proposed acquisitions of Supa IGA at Riverside Gardens, Supa IGA at Banksia Beach, Supa IGA at Rasmussen

Acquirer(s)

  • Woolworths Limited

Target(s)

  • Supa IGA at Rasmussen<br/> Supa IGA at Banksia Beach<br/> Supa IGA at Riverside Gardens

Summary

Woolworths Limited proposed to acquire three Supa IGA supermarkets located in Queensland:

- the Supa IGA supermarkets located at Banksia Beach (Bribie Island) and at Riverside Gardens (Townsville) will be acquired from companies jointly owned by Cornett Investments Pty Ltd and Metcash Trading Limited (Metcash); and

- the Supa IGA supermarket located at Rasmussen (Townsville) will be acquired from a company jointly owned by the Walters Group and Metcash.

Market definition

The ACCC considered the proposed acquisitions in the context of the following markets:

- Three local retail supermarket markets, each relating to one of the target stores:
o In relation to the Banksia Beach store, the whole of Bribie Island.
o In relation to the Rasmussen store, the suburbs of Kelso, Rasmussen, Condon and parts of the suburbs of Kirwan and Thuringowa Central in south-western Townsville, including the Willows Shoppingtown and Sunland Plaza shopping centres.
o In relation to the Riverside Gardens store, the area including the suburb of Douglas bordered by the Ross River to the west, and parts of the suburbs of Annandale and Aitkenvale including the Annandale Central and the Stockland Townsville shopping centres.

- The state-wide retail supermarket market; and

- The state-wide market for the wholesale procurement and supply of packaged groceries.

Competition analysis

The ACCC concluded that none of the proposed acquisitions would have the effect, or be likely to have the effect, of substantially lessening competition in any market.

With regard to the proposed acquisition of the Banksia Beach store, the ACCC concluded that:

- although the proposed acquisition would significantly increase Woolworths' market share, Woolworths would remain constrained by other supermarkets on Bribie Island (ALDI and Supa IGA Bongaree)

- the Cornett Group would retain a Supa IGA in the relevant market (at Bongaree, towards the south of the island). Therefore the Cornett's Supa IGA offer would remain available to customers on Bribie Island

- the Banksia Beach store appeared unlikely to be acquired by an alternative buyer that would lead to a more competitive outcome.

With regard to the proposed acquisition of the Rasmussen store, the ACCC concluded that:

- there would be a Supa IGA in the relevant market (the Supa IGA store at Sunland Plaza, north of the Rasmussen store and on the west side of the Ross River). Therefore the Supa IGA offer would remain available to customers in the relevant market. The market would also contain a Coles supermarket at the Willows Shoppingtown

- even if one of the other main supermarket retail brands operating in Townsville (Coles, IGA) acquired the Rasmussen store, this would not increase the variety of offers already available in the Sunland Plaza and Willows Shoppingtown shopping centres

- the Rasmussen store appeared to be a successful supermarket, suggesting that it may be an effective competitor in the local market. However, the evidence suggested that the Rasmussen store performed well mainly due to its location, rather than because it attracted customers through a particularly distinctive offer.

With regard to the proposed acquisition of the Riverside Gardens store, the ACCC considered that the Riverside Gardens store did not have a distinctive local offering that attracts customers away from its competitors. The Riverside Gardens store was making losses, and had been unattractive to potential buyers. Therefore, the ACCC concluded that Woolworths, with the proposed acquisition, would not be acquiring a significant competitor or removing the potential for the Riverside Gardens store to offer enhanced competition in the future.

The ACCC considered that the proposed acquisitions would be unlikely to alter competition materially in the relevant state-wide retail and wholesale markets.

Timeline

DateEvent
14/05/2013ACCC commenced review under the Merger Process Guidelines.
17/05/2013Timeline suspended pending receipt of information requested from the merger parties. Former closing date for submissions from interested parties of 4 June delayed. Former proposed decision date of 4 July delayed.
27/05/2013ACCC received further information from the merger parties. ACCC timeline recommenced.
11/06/2013Closing date for submissions from interested parties.
24/06/2013Timeline suspended at the request of Metcash and the vendors to allow them additional time to provide further information requested by the ACCC. Former proposed decision date of 11 July 2013 delayed.
22/07/2013ACCC received the further information requested. ACCC timeline recommenced.
30/07/2013Timeline delayed by one week at the request of Woolworths to allow it to provide further information. Former proposed decision date of 15 August 2013 delayed.
13/08/2013Timeline delayed by one week due to delay in provision of further information by Woolworths. Former proposed decision date of 22 August 2013 delayed.
29/08/2013ACCC announced it would not oppose the proposed acquisition.