Retail News Update

The competition regulator has confirmed it will oppose the acquisition by Woolworths of a suburban supermarket outside Canberra, acting against the strategy of ”creeping acquisitions” by major retailers and leaving an opening for an independent operator.

Details of the proposed acquisition by Woolies of the Karabar supermarket in Queanbeyan were aired during hearings held by the Australian Competition and Consumer Commission’s inquiry into the grocery industry in April.

The hearing heard that independent supermarket owner Supabarn Group, headed by Canberra businessman Eric Koundouris, had been negotiating to buy the supermarket, but had been ”gazumped” by Woolworths.

The hearings also heard of concerns over the strategies used by Woolies and Coles, such as restrictive leases and using planning laws to stop rivals, in order to maintain their retail duopoly.

Today’s statement by the ACCC follows a preliminary report last month indicating it was inclined to take a strong line against the acquisition. It opens the way Mr Koundouris to buy the supermarket.

ACCC chairman Graeme Samuel said he had concluded the acquisition would be likely to substantially lessen competition.

If the deal proceeded, Woolies would own three of the four full-line supermarkets in the Queanbeyan area, or three out of five if the smaller Aldi supermarket was included, he said.

Mr Koundouris told Mysmallbusiness the decision was a ”win for competition and consumers”, saying he believed it was the first time the strategy of creeping acquisitions by the larger deep-pocketed retailers had been successfully challenged.

”It’s a good step but if the government is really serious about keeping the lid on grocery prices and inflation, more needs to be done,” he said.

Mr Koundouris called on local councils to be allowed to assess planning applications for new sites on competition grounds, so that smaller operators had a chance to bid for sites, rather than being passed over by developers in favour of the cashed-up majors.

The ACCC said Supabarn supermarkets offered a different proposition to existing operators in the local market and created greater consumer choice and enhanced competition.

The ACCC is expected to deliver its report into the grocery industry to the government by 31 July.