The Commerce Commission has granted clearance for Woolworths Group Limited (Woolworths) to acquire 100 percent of the shares in Beak & Johnston Holdings Pty Ltd (Beak & Johnston).
In reaching its decision, the Commission considered the potential impact of the proposed acquisition on competition in national markets for slow-cooked meats, chilled and canned soups, chilled and frozen ready-made meals, and pies (which are all different types of convenience or ready meals).
Chair Dr John Small said the Commission was satisfied the acquisition is unlikely to lessen competition in any New Zealand market substantially.
“Our investigation found that notwithstanding Woolworths’ significant retail grocery business, the proposed acquisition was unlikely to result in the merged entity refusing to supply Beak & Johnston products to rival grocery retailers, refusing to purchase products from a rival supplier, or doing so on less favourable terms such that it would substantially lessen competition," said Dr Small.
“We don’t believe that Woolworths would have the ability or incentive to restrict rival retailers’ access to convenience or ready meals, nor do we consider any attempt to do so would result in substantially lessening competition in relevant retail markets. Rival grocery retailers could acquire from alternative suppliers across the relevant product categories. This applies to both branded Beak & Johnston products and private label products manufactured by Beak & Johnston."
He added that the investigation considered whether there was a risk of Woolworths either delisting the products of rival suppliers to Beak & Johnston or compromising the attractiveness of their products. Ultimately, they didn’t consider delisting rival suppliers a likely scenario, as Woolworths is unlikely to want to reduce the range of products it sells in these categories, which are generally projected to grow.
The Commission also concluded that any efforts by Woolworths to compromise the attractiveness of rival suppliers’ products were unlikely to lessen competition substantially. While it recognised the proposed acquisition may result in Woolworths potentially ranging more Beak & Johnston products, given the limited nature of the range, and the projected growth of the sales of convenience or ready meals, it didn't believe this would be sufficient to cause competitive harm in the market.
“We saw no evidence to indicate the proposed acquisition would materially change decisions on the ranging, shelf-positioning or pricing of private label and Beak & Johnston branded products in Woolworths stores in a way that would substantially lessen competition.”
A decision to clear this proposed acquisition does not mean that any acquisition of a supplier by a major grocery retailer would be similarly approved, as the Commission assesses each merger or acquisition on its own merits. A decision whether or not to give clearance to the proposed acquisition would be based on the specific facts in this case.
