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ACCC to review Coles’ Supabarn acquisition

Coles-3The Australian Competition and Consumer Commission (ACCC) will commence a public review of Coles’ proposed acquisition of Supabarn supermarkets, this week.

“Given Supabarn’s position as a significant independent supermarket chain, an important focus of the ACCC’s review will be whether its removal as a competitor would substantially lessen competition between supermarket chains,” ACCC chairman, Rod Sims, said.

“The review will also examine each of the individual local markets in which the Supabarn stores operate, and any effect on grocery wholesaling and supply markets, ” Sims said.

Supabarn is a privately-owned supermarket operator that owns and operates four supermarkets in Canberra – Canberra Centre, Crace, Kaleen and Wanniassa – and is developing a fifth at Casey.

It also has stores in Sydney including at Annandale, Five Dock, Sans Souci, and Sutherland. Many Supabarn-owned and operated stores are full line supermarkets of a similar size to typical Coles or Woolworths stores, and include a liquor section.

There are also four independently owned stores which operate under the SupaExpress and Supabarn Express banners. These stores are not included in the proposed acquisition.

“The legal test which the ACCC will apply in considering the proposed acquisition is in Section 50 of the Competition and Consumer Act (2010). Section 50 prohibits acquisitions that substantially lessen competition in a market, or are likely to do so,” Sims said.

“The main indicator of a substantial lessening of competition is whether the acquisition would enable firms in the market to raise prices or reduce product quality (including service and choice) or innovation following the acquisition. Section 50 does not allow the ACCC to consider factors other than those related to competition. In particular, the ACCC cannot oppose a proposed acquisition because of its potential to impact on the character of a local area,” Sims said.

As part of its review, the ACCC will invite submissions from consumers, suppliers, supermarket operators and other interested parties.

The ACCC will commence its review next week and will be accepting public submissions until mid-July.

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