Australian court hearing on Franklins sale starts
Retailer Pick n Pay on Monday, 14 March 2011, announced that the hearing of the Australian Competition and Consumer Commission's (ACCC) application for an injunction to prevent Australian retailer Metcash from acquiring its Australian operation, Franklins, commenced in the Federal Court of Australia in Sydney on Monday.
The hearing is scheduled to last until 30 March, but may finish earlier.
On 1 July last year, Pick n Pay, announced that it had decided to sell Franklins to Metcash but the ACCC conducted a review of the R1.5 billion sale and on 17 November announced that it opposed the transaction.
Pick n Pay and Metcash then announced on 23 November that they were taking further steps to proceed with the transaction and this resulted in the commencement of legal proceedings by the ACCC to prevent the sale going ahead.
Removing competition
The commission believes that the deal could mean a significant lessening of competition through the removal of Metcash's closest competitor in the New South Wales (NSW) groceries sector.
"We believe the ACCC's assessment is flawed. Metcash and Pick n Pay consider that, among other things, the ACCC fails to take into account the impact of Woolworths and Coles on competition at all levels of the grocery supply chain," said Pick n Pay.
Pick n Pay chairman Gareth Ackerman added that the group disagreed with the ACCC's assertions and said it was confident in the merits of its legal arguments.
"We remain confident our arguments will ultimately prevail," said Ackerman.
Last year, sources close to the deal told I-Net Bridge/BusinessLIVE that the burden of proof had shifted to the ACCC.
"It's now up to them to disclose in court why they made their decision to oppose and who exactly the two bidders they claim are interested in Franklins are," they said.
Other interested parties
In November last year, the commission said there were "other parties" that would not raise the same competition concerns as Metcash that had "expressed strong interest in acquiring the entire Franklins business".
Pick n Pay, however, said it had not received any "credible" bids for the entity as a whole.
Ackerman said that he was very surprised by the ACCC placing any weight in its decision on unnamed parties, who had apparently expressed strong interest to the ACCC in acquiring the Franklins business.
"There has definitely been interest from a couple of people, but no viable bids," he told I-Net Bridge/BusinessLIVE last year.
Source: I-Net Bridge
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