While Coles has come to an agreement with the Australian Competition and Consumer Commission (ACCC) to establish a streamlined assessment protocol for single supermarket acquisitions, including new supermarket developments, Woolworths has decided to head the opposite direction.
Coles reached an initial six month trial period for the protocol that will exclude acquisitions by Coles or Bunnings in liquor or hardware.
This follows the announcement by ACCC chairman Rod Sims in June 2012 that the ACCC is focusing on incremental small retail acquisitions by the major supermarket chains (MSCs) in light of concerns about the continued expansion of Woolworths and Coles in various sectors.
Despite Woolworths not reach an agreement to protocol it will continue to notify the ACCC of certain types of transactions as it has previously done, primarily acquisitions of existing stores but with expanded up front information, at Woolworths’ discretion.
“While the outcome with Coles in relation to single supermarket acquisitions, including new greenfield supermarket developments, is pleasing and appreciated, the overall outcome is disappointing,” ACCC chairman Rod Sims said.
“We are particularly disappointed that Woolworths was not willing to reach an agreement with the ACCC in supermarkets, liquor or hardware, particularly given the size of Woolworths existing store network and, most important, its evident growth plans.
“The protocol was a genuine attempt by the ACCC to significantly expedite the acquisition assessment process.”
Sims also acknowledged, however, the proposed protocol was a voluntary arrangement and the MSCs were perfectly entitled not to participate.
“What needs to be understood, however, is that the ACCC will continue to pay close attention to all acquisitions in the supermarket, liquor, hardware and fuel sectors by the major supermarket chains, including new greenfield store developments,” he said.
“The ACCC will do this not only through notification by the MSCs and the ACCC’s own monitoring activities but, importantly, through information received from the market. Indeed, information received from the public will be important, including particularly in relation to greenfield developments.”
Despite only limited acceptance of the protocol the negotiation process over the last six months has brought some benefits. Bunnings has, for example, agreed to continue its existing practice of notifying the ACCC of all proposed home improvement store acquisitions but outside the protocol. Coles will only notify liquor acquisitions at its discretion.
Meanwhile, acquisitions by Coles and Woolworths not covered by the protocol will be assessed in accordance with the ACCC’s usual merger process and timelines.