Australia's competition watchdog has indicated that it will not block Woolworths Ltd's proposed acquisition of organic supermarket operator Macro Life.


The Australian Competition and Consumer Commission (ACCC) concluded that the acquisition is unlikely to substantially lessen competition in the relevant organic food and grocery markets.


Woolworths would acquire Macro's organic supermarkets at Crows Nest, Hornsby and Mona Vale in NSW, and Richmond, Black Rock, Glen Waverley and Armadale in Victoria, and a store in Port Melbourne that Macro leased but never opened.


Woolworths proposes to convert the eight sites into its Thomas Dux Grocer store format, which are smaller than its conventional supermarkets and sell premium conventional and organic groceries and produce.


Considering the extent to which Macro and Woolworths compete in the retail sale of organic food and grocery products, the ACCC found that competition was limited due to key differences in their offering.


"Organic products are only a small component of the range in Thomas Dux stores and make up less than 1% of sales in Woolworths' full-range supermarkets; their closest competitors are other supermarkets," acting ACCC chairman Peter Kell said.

"In contrast, Macro focuses almost entirely on organic products. It is less competitive on price, instead emphasising range, quality, service, location and convenience. The ACCC's extensive inquiries found Macro's closest competitors to be smaller, independent retailers with a similar focus. These competitors will remain in the market after the acquisition, continuing to provide consumers with choice."