The Australian Competition and Consumer Commission (ACCC) says it will not oppose Coles’ proposed acquisition of five Supabarn supermarkets in New South Wales and the ACT.

Coles originally proposed to acquire nine supermarkets from Supabarn, however, restructured the transaction after the ACCC expressed concerns that the proposed acquisition would be likely to substantially lessen competition. The five Supabarn supermarkets include Canberra Centre, Kaleen and Wanniassa in the ACT, and Five Dock and Sutherland in NSW.

ACCC Chairman Rod Sims said the ACCC’s review focused on two main issues. 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.

“We received vocal feedback from members of the public that Supabarn is competitive and has a differentiated offer from that of the other major supermarket chains. This was borne out by our own analysis,” Mr Sims said.

“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. In these areas, Coles and Supabarn stores are located close together, and there is limited competition from other supermarkets.”

“However, the deal has since been restructured in a way that removes the most problematic stores, as well as two other stores of lesser concern. It also retains Supabarn as a supermarket chain after the acquisition is completed with Supabarn being free to compete under the Supabarn name,” Mr Sims said.

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This story first appeared in Consumer and Impulse Retailing.