Woolworths’ Macro deal a competition concern: Metcash

Posted by Daniel Palmer on 27th May 2009

Metcash is keen to see the ACCC block the acquisition of Macro Wholefoods by Woolworths, according to a report in the Australian Financial Review.

Woolworths, Australia’s largest supermarket chain, announced a fortnight ago that they had reached an agreement with organic food retailer Macro to purchase the company’s stores and organic private label brand. The deal will see all Macro stores re-badged as ‘Thomas Dux’ – the upmarket grocery chain owned by Woolworths.

Interested parties have since been invited by the ACCC to submit their opinions on any potential threat the deal could pose to competition in the grocery sector. Grocery wholesaler Metcash has subsequently sent in their opinion, which claims the proposal would remove another competitor from the grocery sector and harm competition, according to the report.

The key issue raised by the competition watchdog is the extent to which organic retailers compete with the supermarket chains and whether the purchase by a subsidiary of the largest Australian supermarket chain could reduce competition. As Australian Food News discussed previously, the deal could be expected to be blocked if they were to turn the Macro stores into Woolworths supermarkets. However, the fact Woolworths is planning to expand their upmarket chain – which currently operates just two stores – presents a quandary for the ACCC, with their opinion on the matter to have a substantial impact on the ability of the Thomas Dux brand to grow swiftly.

A final decision is anticipated on June 17.

Submission details and more information about the analysis the ACCC plans to undertake can be found by clicking here.