Q & A: Coles proposed acquisition of Supabarn supermarkets

The ACCC’s mergers team invites submissions on the review of Coles' proposed acquisition of Supabarn supermarkets.

What is Coles proposing to buy?

Coles is proposing to buy eight of Supabarn’s existing stores in the ACT and NSW, and one proposed supermarket site in Casey in the ACT. The stores are: Civic, Wanniassa, Kaleen, Crace (ACT), and Five Dock, Sutherland, Sans Souci and Annandale (NSW).

If the acquisition proceeds, Supabarn will retain a store in Gymea (NSW) and a supermarket development site at Kingston (ACT). The SupaExpress stores in the ACT will continue to trade as normal as they are not part of the sale.

Can the ACCC stop the merger and what powers does it have?

Coles and Supabarn have requested that we provide ‘informal clearance’ of the proposed acquisition. The informal clearance process enables merger parties to seek the ACCC’s view on whether the proposed acquisition is likely to have the effect of substantially lessening competition.

If the ACCC forms a view that the proposed acquisition would contravene section 50 of the Competition and Consumer Act 2010, the merger parties may decide not to proceed with the proposed acquisition.

If the ACCC decides to oppose the merger and the parties do not agree to modify or abandon the acquisition, the ACCC can apply to the Federal Court for orders which may include an injunction, divestiture or penalties.

When will the ACCC make a decision?

The former proposed decision date of 3 December was delayed at the request of the merger parties. We will make our final decision on 10 March 2016. We will publish our decision on the mergers public register.

The ACCC released a Statement of Issues on 11 September 2015. A Statement of Issues sets out our preliminary views, and seeks comments on those views. The Statement of Issues is available on the mergers public register.

Doesn't any acquisition of an independent supermarket lessen competition?

We look at acquisitions of independent supermarkets very closely. The legal test we apply is section 50 of the Act.

Section 50 prohibits acquisitions that substantially lessen competition in a market, or are likely to do so.

While the removal of an independent supermarket may lessen competition, the lessening of competition must be substantial for the ACCC to oppose an acquisition.

Whether an acquisition leads to a substantial lessening of competition depends on a range of factors. These include the competitive constraint previously imposed by the business to be acquired, who is proposing to acquire the business and what other competitors would remain in the market.

We are currently considering the significance of Supabarn as a retail chain in the Canberra region (including Queanbeyan), including the potential effects on consumer choice and competitive constraint on the other supermarket chains operating in the Canberra region. We are also considering each local area around the Supabarn stores that are part of the proposed acquisition, including the number of competitors in the area as well as the concentration of those competitors, geographic factors and demographic factors. For more information, see the Statement of Issues.

Section 50 does not allow us to consider factors other than those related to competition. For example, the ACCC cannot oppose a proposed acquisition because of its potential to impact on the character of a local area.

See also: The ACCC's approach to merger reviews

How can I make a submission?

The deadline for making a submission was 1 October 2015.

More information

Coles - proposed acquisition of 9 Supabarn supermarkets
 

Published date: 
3 July 2015

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