Creeping acquisitions legislation to open competition in grocery retailing: Emerson

Posted by Daniel Palmer on 22nd January 2010

The Federal Government is set to amend the Trade Practices Act to deal with creeping acquisitions, in a bid to limit the market power of the major retailers.
The move will ensure the Australian Competition and Consumer Commission (ACCC) has the ability to reject acquisitions that would substantially lessen competition in any local, regional or national market, Competition Minister Dr Craig Emerson said.

“This comes after private legal opinion questioned whether the ACCC has the power to consider effects on competition in local markets, suggesting it can examine impacts only in regional markets and the national market,” a statement from the Minister advised. “The Government’s pro-competitive reforms will clarify that the ACCC, in deciding whether an acquisition would substantially lessen competition, can examine the impact on any market – local, regional or national.

“The amendments will enable a proposed acquisition to be rejected whether it substantially lessens competition in a local, downstream market (for example the local retail liquor market) or in a broader, upstream market (for example the liquor wholesaling market).”

The revised Trade Practices Act will also confirm the ACCC’s power to examine the acquisition of greenfield sites, something that has previously come under question.

“This will ensure the ACCC can review acquisitions by the major supermarket chains of interests in new sites to investigate whether such acquisitions could substantially lessen competition,” Dr Emerson said.

“The Government is seeking to open opportunities for competition in grocery retailing by removing anti-competitive barriers to entry. For example, the Government wants to ensure that no supermarket (including large supermarket chains) can dispute the ACCC’s power to consider decisions to buy up land in a local market area to keep out new competitors.”

An update of the Trade Practices Act to counter the impact of creeping acquisitions – which see a major firm gain significant market power by a series of small purchases – was a key recommendation from the Grocery Price Inquiry of 2008.