Coles’ Western Australian expansion gets ACCC clearance

Posted by AFN Staff Writers on 22nd September 2014
ACCC will not oppose proposed acquisition of three Supa IGA stores in WA by Coles
ACCC will not oppose proposed acquisition of three Supa IGA stores in WA by Coles

The Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose the proposed acquisition of three Progressive Supa IGA supermarkets by Coles/Wesfarmers. Metcash Limited has a 45 per cent interest in the Progressive supermarkets.

The supermarkets are located in Bunbury, Halls Head, and Dianella in Western Australia. The Halls Head store also has an attached liquor licence.

“The ACCC noted community concerns that the proposed acquisition would remove Progressive’s differentiated offering from the local areas,” said Dr Jill Walker, ACCC Commissioner. “However, in each of the local markets around these three stores, there is at least one large competitive independent offer, in addition to Woolworths’ supermarkets,” she said.

“The ACCC also took into account information that suggested that Aldi would be likely to enter some of the relevant markets in the coming years as part of its expansion into Western Australia,” Dr Walker said.

The ACCC analysed the competitive dynamic that would likely exist if the acquisition by Coles does not proceed, noting the decline in sales at the Progressive stores and the potential for the stores to be closed without the acquisition. The ACCC also noted Metcash’s willingness to sell the stores, despite the fact that Metcash will lose grocery sales at the wholesale level.
For these reasons, the ACCC concluded that the proposed acquisition of these three stores is not likely to result in a substantial lessening of competition in the relevant local markets for supermarket retailing.

The ACCC said it had also considered Coles’ proposed acquisition of the Progressive Supa IGA supermarket in Busselton. Coles has not sought an ACCC view on the Busselton acquisition at this time, as it is seeking to provide further information to the ACCC. The ACCC will reconsider Coles’ proposed acquisition of the Busselton supermarket when this information is received.

WA grocery retail

Coles is expanding in Western Australia at the same time as the grocery retail landscape looks set to change in that State.

Australian Food News reported in August 2014 that a report from the Economic Regulation Authority (ERA) had recommended that retail trading hours be deregulated in Western Australia. The Western Australian Grocers Association President, John Cummings, said at the time of the report’s release that it “fails to consider the real world implications” of its recommendations for the whole retail sector, particularly for small retailers.

Australian Food News noted at the time that Western Australia had been an exception to the domination of the supermarket scene by Woolworths and Coles. Unlike the Eastern states, there are many family-owned or independent retailers who continue to play a large role in the retail landscape of Western Australia.

In this environment, Australian convenience store business 7-Eleven has also entered the Western Australian environment, with the company opening its first 7-Eleven store in the State earlier in September 2014. 7-Eleven convenience stores are open 24 hours a day, 7 days a week.