Blog: Metcash, Franklins get their day in court over ACCC ruling
Petah Marian | 15 March 2011
Metcash and Pick n Pay have gone to the Federal Court in Australia to challenge the Australian Competition and Consumer Commission's (ACCC) decision to block the sale of Pick n Pay's Franklins operations to Metcash.
The watchdog blocked the A$215m (US203.9m) sale in November last year, saying that the planned acquisition would "result in a substantial lessening of competition through the removal of Metcash's closest and only genuine competitor for the wholesale supply of packaged groceries in NSW."
In court yesterday, ACCC representative Norman O'Bryan, SC said that independent supermarkets only have three "realistic" choices for the wholesalse supply of packaged groceries - Metcash, Franklins and Spar.
"And of those three Metcash is far and away the biggest, most powerful, most successful and most important," O'Bryan said.
Meanwhile, Metcash's barrister Justin Gleeson SC described the ACCC's decision as "economic engineering", some form of experiment farm" and an "exercise in futility".
In a market which is dominated by the two leading players, Woolworths and Coles, which have 44% and 32% respectively, the deal would mean that Metcash would improve its scale in New South Wales from 11% to 17%, which would allow it to better compete with the country's retail giants.
The case is expected to run for the next two weeks.
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