The Australian Competition and Consumer Commission (ACCC) is appealing against a court ruling that cleared Metcash to buy local retail rival Franklins.

Last month, Australia’s Federal Court dismissed an application by the ACCC to stop Metcash proceeding its plan to buy Franklins from South African retailer Pick n Pay.

However, the competition watchdog has challenged the ruling and today (9 September) claimed the court made a number of “significant legal and factual errors in dismissing the ACCC’s application to stop the proposed acquisition”.

The ACCC has also claimed the green light for the acquisition will stifle competition and set a dangerous precedent.

“We are appealing this case for two reasons,” ACCC chairman Rod Sims said. “First, because of the adverse effect of the proposed acquisition on independent supermarket retailers, consumers and competition in the New South Wales and ACT grocery sector.

“Second, 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.”

Metcash said it was “disappointed” with the appeal. “The ACCC’s decision to appeal further delays a transaction that was first announced in July 2010 and which the Federal Court concluded was likely to enhance the ability of independent IGA retailers to compete with the major supermarket chains,” it said.