Coles Group Limited - proposed acquisition of Glengarry Tavern WA

Summary

Coles is Australia's second largest grocery retailer. Coles operates packaged liquor retailing businesses in WA under the business names 1st Choice liquor superstores, Liquorland and Vintage Cellars. Coles proposed to acquire the Glengarry Tavern and bottleshop which are located in Warwick Road, Duncraig, Western Australia. Duncraig is in the northern suburbs of Perth.

Market definition

This proposed acquisition was assessed within the context of the following markets:

1. the market for the retail sale of packaged liquor for off-premises consumption. The geographic dimension of this market is a 3-5km radius surrounding the target business;

2. the WA market for the wholesale supply of packaged liquor for subsequent sale in the retail market for off-premises consumption; and

3. a local market within a 3-5km radius of the Tavern for the sale of liquor for on-premises consumption, gaming and live music (hotel services).

Competition analysis

On 24 October 2007, the ACCC announced that it had formed the view that the proposed acquisition was unlikely to result in a substantial lessening of competition in any relevant market. Factors informing this conclusion included:

- In relation to the first market, the ACCC concluded that post-acquisition, the Coles Group will continue to be constrained by competition from Woolworths and a number of independent bottle shops in the local area;

- In relation to the second market, the ACCC considered that Coles Group's relatively small increase in market share as a result of the acquisition was unlikely to significantly increase Coles Group's buying power or to substantially weaken any competing wholesaler by diminishing its buying power; and

- In relation to the third market, the ACCC concluded that post-acquisition, the Coles Group will continue to be constrained by competition from a number of competing hotels in the local area, and possibly also the variety of entertainment venues likely to offer similar experiences to attending a tavern.