ACCC could reject Woolies' pub deal
Australia's competition watchdog has outlined serious concerns with the Woolworths-owned Australian Leisure & Hospitality Group's proposed acquisition of a Sydney pub and big box liquor store owned by the Bayfield Hotel Group.
ALH's estimated $45 million purchase of the Caringbah Inn and the 800 square metre 'Bayfields at the Caringbah' bottleshop is one of several deals currently in a merger queue with the ACCC.
The ACCC yesterday revealed its preliminary view that the Caringbah deal – under which the bottleshop would likely be rebranded as a Dan Murphy's or BWS – is likely to result in a substantial lessening of competition in the local market for packaged liquor sales.
"The ACCC considers that this is likely to occur as a result of the removal of Caringbah Bayfields as a vigorous and effective competitor in that market," it said.
The ACCC said that the closest other large format 'destination' store to Caringbah Bayfields is the Coles-owned 1st Choice Liquor in Sylvania, 3km away. The next closest is the Dan Murphy's at Hurstville, 10km from Caringbah Bayfields.
"Market inquires undertaken by the ACCC indicate that the prices offered by the Caringbah Bayfields during its regular specials are usually discounted aggressively," the watchdog said.
"While Bayfields at least matches all Bottlemart specials (as required under its buying group conditions) Bayfields often offers an additional discount beyond the advertised Bottlemart special."
The ACCC said that while 1st Choice at Sylvania is also a large format store with a broad range, competitive pricing and a price-matching retail policy, the 1st Choice brand does not appear to respond to local competition in the same way as Dan Murphy's.
"While it will match competitors' prices on an ad-hoc basis on request of a customer, it does not alter in-store shelf prices in response to local competition," it said.
"As such, the ACCC currently considers that the competitive constraint imposed by 1st Choice in the area post-acquisition would be less than the constraint currently provided by Caringbah Bayfields."
The ACCC has invited market participants to comment on the deal by June 14.
Source: The Shout, 1 June 2012
