The Australian Competition and Consumer Commission (ACCC) has decided to appeal the Federal Court’s decision to allow Metcash to purchase Franklins, citing two specific reasons.
According to Chairman Rod Sims, the first reason is the adverse effect the proposed acquisition will have on “independent supermarket retailers, consumers and competition in the NSW and ACT grocery sector.”
“Metcash, with this proposed acquisition, will have an ability to increase prices and/or reduce service to independent supermarket retailers,” Sims said.
Secondly, the ACCC is appealing, because if left unchallenged “the Court’s interpretation of some fundamental principles of merger analysis could have serious implications for the ACCC’s ability to block anti-competitive mergers and so protect consumers in the future.”
A little over a fortnight ago, the Federal Court ruled against the ACCC after it sought an injunction last December to prevent the acquisition from proceeding, on grounds it would result in the lessening of competition in the wholesale grocery market.
“We remain concerned that the proposed acquisition would remove any future ability for those independent retailers to choose from whom they get their grocery supplies,” Sims said.
The ACCC said it’s had a number of submissions from independent retailers which state competition to Metcash at the wholesale level is necessary for them to control the cost of their goods.
When the Federal Court judgement was handed down last month, consumer groups welcomed the news, with Choice saying any real alternative provided to Woolworths and Coles in the grocery space is a win for consumers.
“What there really needs to be is more competition in this sector, so at the end of the day if Metcash is able to provide an alternative to the two big players that can compete on the product range, on the price, on the customer service level and convenience, then the consumers will have greater choice,” Choice spokeswoman Ingrid Just said.