/ 8 December 2010

Australia takes Pick n Pay deal to court

Australia's antitrust watchdog began legal action to block Pick n Pay's sale of its unit in that country to retailer Metcash.

Australia’s antitrust watchdog began legal action to block Pick n Pay’s sale of its unit in that country to retailer Metcash, a move the South African firm said makes little sense.

Pick n Pay has agreed to sell its Franklins supermarket chain to Australia’s Metcash for Aus$215-million to focus on instead on pursuing growth closer to home.

But the Australian Competition and Consumer Commission, which says the deal would give Metcash a monopoly on grocery wholesaling in New South Wales regions, began legal proceedings to block the deal.

Pick n Pay chairperson Gareth Ackerman disputed that Metcash would gain a monopoly, citing the strength of rival retailers Coles and Woolworths.

“It seems contrary to common sense to suggest that the sale of 1% of the national grocery market to the No 3 player, in a market that is more than 75% dominated by Coles and Woolworths, could substantially lessen competition,” he said in a statement.

The commission has opposed several deals over the past year. — Reuters