The Australian Competition and Consumer Commission (ACCC) has said it will not oppose Metcash Trading's proposed acquisition of Australian supermarket firm Foodland Associated.

ACCC chairman Graeme Samuel said the proposed acquisition is unlikely to substantially lessen competition in the supermarket industry at the retail level, since there is only a limited geographical overlap (in Queensland and Northern New South Wales), and in those areas where the overlap occurs there will be continued strong competition from the other market participants.

Metcash is Australia's largest independent grocery and liquor wholesaler and distributor, operating in Queensland, New South Wales, Victoria, South Australia and the ACT. The IGA brand is controlled by Metcash and is licensed to independent store operators.

Foodland Associated operates 81 Action Supermarkets in Western Australia, Queensland, and northern New South Wales. It is also the grocery wholesaler to all Western Australian independent supermarket operators, including its own franchise banner groups Dewsons, Supa Valu, Foodland and Four Square.

"At the wholesale level there is virtually no overlap, as Metcash does not operate in Western Australia, the only state in which Foodland Associated operates as a wholesaler and distributor servicing independent supermarkets," Samuel said.