The long awaited decision of the Federal Court in the Australian
Competition and Consumer Commission's (ACCC)
application to prevent the acquisition by Metcash Trading limited
(Metcash) of all of the shares in Interfrank Group
Holdings Pty Limited (Franklins) (proposed
acquisition) was today handed down by Justice Emmett. The
ACCC failed in its quest to show that the proposed acquisition
would likely result in a substantial lessening of competition under
section 50 of the Competition and Consumer Act 2010
(CCA). The ACCC was ordered to pay the costs of
Metcash and Pick n Pay.
In a summary of conclusions, Emmett J stated that the ACCC's
pleaded case as to the relevant market definition was not made out,
nor was the court persuaded that it "is more likely than
not" that a third party would offer to acquire the whole, or a
significant majority of the Franklins assets, thereby rejecting the
As is often the case, the relevant market was the subject of
debate, with the ACCC having contended that the proposed
acquisition should be considered in the market for "the
wholesale supply of packaged groceries to independent
supermarkets". In rejecting the ACCC's pleaded market,
Emmett J highlighted the constraints arising from competition at
the retail level between independent retailers supplied by Metcash
and supermarkets operated by the major supermarket chains, noting
that retail competition is "highly relevant" to market
In consideration of the counterfactual, the ACCC contended it
was only required to establish that there was a "real
chance" that the counterfactuals it put forward would come to
pass in the event that the acquisition did not proceed. However,
the court found that even if that contention was correct, it was
not persuaded that there was a "real chance" of any
potential binding offer from a third party. Moreover, His Honour
recognised that even if an offer were made to Pick n Pay Retailers
(Pty) Limited (Pick n Pay), there is no guarantee
that such offer would be accepted.
In concluding that the proposed acquisition would not contravene
section 50 of the CCA, Emmett J went so far to say that he
considers "it quite likely that the acquisition of Franklins
by Metcash will strengthen the capacity of independent retailers
operating under the IGA banner to compete more vigorously with the
major supermarket chains".
The Federal Court will hand down reasons for its judgment
1. The counterfactual refers to the likely future state
of competition without the proposed acquisition.
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