AUSTRALIA | Coles Supermarkets' lease acquisition in two Victorian locations has not been opposed by the ACCC, subject to divestment.
The ACCC said it will not oppose Coles Supermarkets Australia Pty Ltd, a subsidiary of Coles Group Limited (ASX: COL), acquiring leasehold interests to establish new supermarkets in Victoria at Mt Atkinson Major Town Centre and Deanside Central Town Centre, subject to an undertaking.
The court-enforceable undertaking accepted by the ACCC requires Coles to divest its ownership and interest in a site at the nearby Kororoit Town Centre.
The two proposed acquisitions, combined with Coles’ interest in the Kororoit sit,e would have meant consumers would have limited choice beyond Coles supermarkets in the relevant local area.
Mt Atkinson, Deanside and Kororoit are all areas close to each other, in the Melton Growth Corridor, northwest of Melbourne. Each of the relevant Coles sites in these areas is suitable for large-format supermarkets.
The ACCC had concerns that the proposed acquisitions would have the effect, or be likely to have the effect, of substantially lessening competition in the retail supply of groceries and household products within the local markets of each of Deanside Central and Mt Atkinson.
Coles has undertaken to divest the Kororoit site to Neale Deanside Developments Pty Ltd, trading as Oreana, so that it will be available for a competitor to enter the local area. The ACCC has approved this purchaser.
“Without the divestiture undertaking, the proposed acquisitions would have given Coles three supermarkets within close proximity to each other, in local areas with few alternative sites suitable for supermarkets and few existing competitors,” ACCC Deputy Chair Mick Keogh said.
“In an area in which Coles already had a significant supermarket presence, we were concerned Coles would control most of the sites suitable for large format supermarkets within 5km of the target sites.”
The ACCC was concerned that the proposed acquisitions would significantly increase barriers to entry and expansion for rival supermarkets to enter the relevant local markets.
The ACCC concluded that, absent the divestiture undertaking, the proposed acquisitions would substantially lessen the overall competition in the supply of groceries in the local areas and the broader Melton growth corridor.
“The divestiture ensures that the Kororoit site is available to a rival supermarket operator,” Keogh said.
“It’s important that residents of these new suburbs don’t suffer from a lack of supermarket competition, as we observed for many established suburbs around Australia in the ACCC’s recent Supermarkets Inquiry.”
