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RETAILING: Pick n Pay's Problems In Australia

 



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Cape Town's Pick n Pay yesterday confirmed that the Australian Competition and Consumer Commission (ACCC) commenced legal proceedings in the Federal Court to prevent the proposed sale of Franklins by Pick n Pay to Metcash Trading Limited (Metcash).

The Statement of Claim filed today sets out the key elements of the ACCC’s case.   The ACCC has agreed to an expedited hearing of the case.  A timetable for the necessary preparatory steps leading up to the hearing will be established by the Court at a Directions Hearing on 10 December 2010.

Responding to the filing of the Statement of Claim, Pick n Pay Chairman, Mr Gareth Ackerman, said:

We fundamentally disagree with the ACCC’s view that the proposed sale of Franklins to Metcash will reduce competition and believe the sale will be pro-competitive by creating a combined group with greater, national scale to take on the major grocery chains. 

The ACCC’s arguments take little or no account of the power of Coles and Woolworths and how those organisations dominate all levels of the supply of groceries in New South Wales and throughout Australia. 

It seems contrary to common sense to suggest that the sale of 1% of the national grocery market to the number three player, in a market that is more than 75% dominated by Coles and Woolworths, could substantially lessen competition.

We are confident in our arguments and look forward to the opportunity to have this case decided by the Federal Court,” he said.

On 1 July 2010 Franklins’ parent company, Pick n Pay, announced that it had decided to sell Franklins to Metcash.  The ACCC conducted a review of the sale and on 17 November 2010 announced that it opposed the transaction.  Pick n Pay and Metcash announced on 23 November that they were taking further steps to proceed with the transaction which has resulted in the commencement of legal proceedings by the ACCC today to prevent the sale going ahead.  As part of an agreement with the ACCC to seek an expedited final hearing of the matter, Metcash has undertaken not to proceed with the sale pending the outcome of the court process.


 
 
 
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