The competition regulator has given the green light to the acquisition by Coles of five Supabarn supermarkets across the ACT and New South Wales. The grocery giant had originally proposed to take over nine of Supabarn’s 11 stores, however the plan was slammed by consumer groups concerned about the impact the move would have on competition.
The ACCC also expressed concern the purchase of nine stores would likely substantially lessen competition. A restructured deal that would see Coles acquire the Supabarn stores at the Canberra Centre, Kaleen and Wanniassa, as well as the Five Dock and Sutherland supermarkets in New South Wales was today approved by the regulator.
The ACCC said the decision removed the most controversial stores from the deal. “The ACCC’s review focussed on two main issues,” ACCC Chairman Rod Sims said. “These were the effect of the acquisition upon competition between supermarket chains in the Canberra region and the effect upon each of the individual local markets in which the Supabarn stores operate.
Mr Sims said the stores that were barred from sale were already close to operating Coles stores. “We were also concerned that the proposed acquisition, as originally structured, would have led to significant competitive harm in some of the local markets in the ACT and NSW,” Mr Sims said. “In these areas, Coles and Supabarn stores are located close together, and there is limited competition from other supermarkets.”
One current store at Crace, and two under development in Casey and Kingston, as well as three in New South Wales will now remain in Supabarn’s hands..
Supabarn to continue operating remaining stores
A statement released by Supabarn said the company disagreed with the ACCC on the move. “Notwithstanding the ACCC’s decision, Supabarn continues to maintain that its original plan to sell nine stores to Coles would not have substantially lessened competition,” it said.
Supabarn managing director Theo Koundouris said he would continue to operate the stores that were barred from sale. “We will be repositioning and refreshing the Supabarn brand,” he said.
Coles Property general manager Sam Pinchbeck said the supermarket chain would invest $22 million in the five new stores. “Coles is a major employer both in Sydney and the ACT,” he said. “We will invest more than $22 million on improvements at these five stores and will offer all existing Supabarn store employees an opportunity to continue working in their store for Coles.”
ACT Chief Minister Andrew Barr said he was “philosophical” about the decision, but believed the deal would lessen competition in the ACT. “Given the balance in the duopoly between Woolworths and Coles, it’s probably better that it’s Coles acquiring than Woolworths,” he said. “But it’s hard to see how this isn’t a lessening of competition to a certain extent.”
Four stores that operate under the SupaExpress banner were not affected by the deal. http://www.abc.net.au/news/2016-03-10/accc-approves-coles-acquisition-of-five-supabarn-supermarkets/7235902