Australia: Full Federal Court rejects ACCC's appeal in Metcash

Today, Justices Yates, Buchanan and Finn rejected the ACCC's appeal in Metcash Trading Limited's acquisition of the Franklins assets from Pick n Pay.

As reported by Norton Rose Australia on 25 August 2011, the Federal Court handed down its decision in the Australian Competition and Consumer Commission's (ACCC's) application to prevent the acquisition by Metcash Trading limited (Metcash) of all of the shares in Interfrank Group Holdings Pty Limited (Franklins) (proposed acquisition). Justice Emmett held that the ACCC had failed in its quest to show that the proposed acquisition would likely result in a substantial lessening of competition under section 50 of the Competition and Consumer Act 2010 (CCA).

The Chairman of the ACCC announced on 9 September 2011 that it was appealing the decision of the Federal Court for two reasons: first, because of the adverse effect the proposed acquisition would have on independent supermarket retailers, consumers and competition in the NSW and ACT grocery sector through Metcash's ability to increase prices and/or reduce service to independent supermarket retailers post the proposed acquisition, and second, because the ACCC was of the view that if the decision was left unchallenged, the Court's interpretation of some "fundamental principles of merger analysis could have serious implications for the ACCC's ability to block anti-competitive mergers and so protect consumers in the future".

The ACCC failed in its interlocutory injunction application to prevent the parties from completing prior to the decision of the Full Federal Court being handed down. On 30 September 2011, Metcash completed the transaction to purchase the Franklins chain of supermarkets from Pick n Pay Retailers (Pty) Limited, notwithstanding the ACCC's pending appeal.  

Justice Yates handed down the full court's decision dismissing the appeal. The ACCC was ordered to pay the costs of Metcash and Pick n Pay. No reasons were given by the court at this time.¹

As there are few ACCC informal merger clearance decisions tested before the Federal Court, once reasons become available , we will assess the implications of the decision and comment further, as the reasons for the Metcash decision will potentially have a bearing on the way in which merger clearances are assessed by the ACCC in the future.

Footnotes

¹At the time of writing this release the reasons for the decision were not publically available.

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