The Australian Competition and Consumer Commission today announced it will not oppose the proposed acquisition by Woolworths Limited of the Supa IGA supermarket in Hawker, Australian Capital Territory.
“After an extensive investigation and rigorous consultation with interested parties, the ACCC concluded that the proposed acquisition would not result in a substantial lessening of competition in any market,” ACCC Chairman Rod Sims said.
“The ACCC found that the local market included several supermarket offerings. Within this market, the Hawker Supa IGA’s closest competitor was a Coles supermarket at the nearby Jamison Centre, which also has an ALDI. The local Woolworths supermarkets are more distant competitors.”
Initial market feedback had suggested the Hawker Supa IGA provided a strongly differentiated offering on non-price factors such as its product range and service. The ACCC commissioned customer surveys to test whether this product differentiation was so strong that, taken with other factors, the removal of the Hawker Supa IGA as an independent rival in the market could lead to a substantial lessening of competition.
“The customer surveys showed that while non-price aspects of the Hawker Supa IGA offer were valued by consumers, only a small proportion of survey respondents said an aspect of the Hawker Supa IGA’s range, service or pricing was the most important reason they shopped there. Most customers used the Hawker Supa IGA as a limited part of their overall grocery shopping, and despite its product differentiation, the Hawker Supa IGA drew very few customers from outside the suburbs immediately surrounding it,” Mr Sims said.
“So while the loss of this differentiated offer from the local market will involve the loss of some competition, the ACCC has formed the view that it does not reach the threshold of a substantial lessening of competition required under s.50 of the Competition and Consumer Act.”
“In fact, the surveys showed that customers travel only a short distance to shop at supermarkets. This is consistent with the ACCC’s approach in other supermarket matters, where we have found local markets to be relatively small.”
“The ACCC will continue to pay close attention to all acquisitions involving the major supermarket chains to ensure that any supermarket acquisition does not result in a substantial lessening of competition in any local market,” Mr Sims said.
The Hawker Supa IGA is a 2,000m2 supermarket in the Hawker Group Centre, a moderate sized retail precinct in the Belconnen area of north Canberra.
The ACCC will publish a Public Competition Assessment, setting out the reasons for its decision in more detail, in due course.