On 20 September 2011, the Federal Court dismissed the ACCC’s application for an interim injunction restraining Metcash from acquiring Franklins’ supermarket business until the appeal is determined. At the same time, the court expedited the appeal hearing to 24 October and set it down for three days. This is the latest judgment in the legal proceedings around Metcash’s proposed acquisition of the Franklins supermarket business.
As reported in our alert, on 25 August 2011, the Federal Court dismissed an application brought by the ACCC for a permanent injunction restraining Metcash’s proposed acquisition on the basis that it did not contravene section 50 of the CCA. The ACCC sought the injunction because it considered that the proposed acquisition would involve the removal of Metcash’s only real competitor for the wholesale supply of packaged groceries to independent retailers in NSW and the ACT and thus result in a substantial lessening of competition.
The ACCC filed its appeal against the dismissal on 9 September 2011, with Chairman Rod Sims citing concerns for competition in the NSW and ACT grocery sector as well as broader implications of the Court’s interpretation of fundamental merger analysis principles. In particular, the ACCC have indicated that they are concerned about the Court’s approach to market definition, the certainty which is required of an alternative outcome in the merger analysis process, as well as the weight given to a seller’s stated preferences and intentions.
The ACCC’s appeal hearing ran from 24 October 2011 to 26 October 2011. A decision is expected in early 2012.