Australian Competition and Consumer Commission v Metcash Trading Limited [2011] FCA 967

Australian Competition and Consumer Commission v Metcash Trading Limited [2011] FCA 967

The proceeding failed because the Commission did not prove its pleaded market or its counterfactuals, and did not establish a real chance of substantial lessening of competition. The Court was not persuaded that there was a separate market limited to wholesale supply of packaged groceries to independent supermarket retailers in NSW and the ACT as pleaded. The hypothetical monopolist test should be applied to the wholesale price of goods, not Metcash's margin, and the major supermarket chains imposed a stronger constraint on Metcash than Franklins through retail competition and the threat of acquiring stores. The Commission also failed to show that it was more likely than not, or even a...

Jurisdiction
Australia
Judgment Date
25 August 2011
Procedural Posture
Competition Proceeding Concerning Whether a Proposed Share Acquisition Would Contravene S 50 of the Competition and Consumer Act 2010 (cth) / Final Judgment After Expedited Final Hearing
Outcome
Proceeding dismissed; proposed acquisition held not to contravene s 50(1) of the Competition and Consumer Act 2010 (Cth).
Legal Topics
['section 50 Merger Prohibition' 'substantial Lessening of Competition' 'market Definition' 'hypothetical Monopolist Test' 'counterfactual Analysis' 'wholesale and Retail Grocery Markets' 'vertical Integration']
['competition and Consumer Law' 'trade Practices' 'mergers and Acquisitions'] ['section 50 Merger Prohibition' 'substantial Lessening of Competition' 'market Definition' 'hypothetical Monopolist Test' 'counterfactual Analysis' 'wholesale and Retail Grocery Markets' 'vertical Integration']

Case Brief

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Procedural Posture

Competition Proceeding Concerning Whether a Proposed Share Acquisition Would Contravene S 50 of the Competition and Consumer Act 2010 (cth) / Final Judgment After Expedited Final Hearing

Legal Issues

  1. 1 ["Whether Metcash's proposed acquisition of all shares in Franklins from Pick n Pay would have the effect, or be likely to have the effect, of substantially lessening competition in a market." 'Whether there was a separate market for the wholesale supply of packaged groceries to independent supermarket retailers in NSW and the ACT as pleaded by the Commission.' 'Whether the product supplied was properly characterised as goods or as services, and whether the hypothetical monopolist test should be applied to wholesale price or to wholesale margin.' 'Whether Coles, Woolworths and other major supermarket chains constrained Metcash for the purposes of market definition and competitive effects analysis.' "Whether the Commission's pleaded counterfactuals involving acquisition and operation of Franklins assets by a consortium of independent retailers were required to be established on the balance of probabilities or only as a real chance." 'Whether the factors in s 50(3) supported a conclusion that the proposed acquisition was likely to substantially lessen competition.']

Ratio Decidendi

The proceeding failed because the Commission did not prove its pleaded market or its counterfactuals, and did not establish a real chance of substantial lessening of competition. The Court was not persuaded that there was a separate market limited to wholesale supply of packaged groceries to independent supermarket retailers in NSW and the ACT as pleaded. The hypothetical monopolist test should be applied to the wholesale price of goods, not Metcash's margin, and the major supermarket chains imposed a stronger constraint on Metcash than Franklins through retail competition and the threat of acquiring stores. The Commission also failed to show that it was more likely than not, or even a...

Court Disposition

Proceeding dismissed; proposed acquisition held not to contravene s 50(1) of the Competition and Consumer Act 2010 (Cth).

Orders

  • ['The proceeding be dismissed.' "The applicant pay the respondents' costs of the proceeding."]