Coles buying Supabarn stores in Canberra and NSW may lead to “significant competitive harm”: ACCC

The Australian Competition and Consumer Commission says Coles’ plan to buy nine Supabarn stores in the Australian Capital Territory and New South Wales may harm competition and leave consumers with less choice when it comes to buying their groceries.

Coles is proposing to acquire five Supabarn outlets in Canberra and five in NSW.

The supermarket giant announced the planned acquisitions in June from the Koundouris Group, with the competition watchdog launching a public review into the deal in the same month.

The ACCC is now calling for submissions from the public, after releasing a statement of issues late last week.

ACCC chairman Rod Sims said on Friday the regulator will examine the effect on competition the proposed acquisitions may have, particularly in areas where the Coles and Supabarn stores are located closely together.

The competition watchdog has concerns about Coles’ proposed acquisition of several Supabarn outlets, particularly in instances where the stores are close together.

“The ACCC is closely examining the effect of removing a supermarket chain with a differentiated offer from the market,” Sims said in June.

“In particular, Supabarn is the only full-line supermarket chain in the ACT other than Coles and Woolworths. The ACCC is concerned that Supabarn’s removal may lead to significant competitive harm and loss of choice for consumers. The ACCC recognises, however, that there are other, smaller supermarkets operating in the ACT.”

A spokesperson for Coles told SmartCompany the supermarket will work with the ACCC to address any potential issues in relation to the proposed acquisition.

“Coles is seeking to purchase the nine stores in Canberra and Sydney on a leasehold basis and, if cleared by the ACCC, Coles will offer all existing Supabarn store employees an opportunity to continue working in their store for Coles,” the spokesperson says.

“Coles also plans to invest $30 million in store improvements and create around 200 new jobs in local communities.”

Peter Strong, chief executive of the Council of Small Business of Australia, says his members will certainly be making submissions to the ACCC about the proposed acquisition.

“It’s a real dilemma,” Strong says.

“You’ve got a really successful family that want to sell the business, but because of failed competition there are only two companies [Coles or Woolworths] that can really buy it.”