Commission Grants Clearance For Woolworths To Acquire Beak & Johnston

The Commerce Commission has granted clearance for Woolworths Group Limited (Woolworths) to acquire 100% of the shares in Beak & Johnston Holdings Pty Ltd (Beak & Johnston).

In reaching its decision, the Commission considered the potential impact of the proposed acquisition on competition in national markets for slow cooked meats, chilled and canned soups, chilled and frozen ready-made meals, and pies (which are all different types of convenience or ready-meals).

Chair Dr John Small said the Commission was satisfied the acquisition is unlikely to substantially lessen competition in any New Zealand market.

“Our investigation found that notwithstanding Woolworths’ significant retail grocery business, the proposed acquisition was unlikely to result in the merged entity refusing to supply Beak & Johnston products to rival grocery retailers, refusing to purchase products from a rival supplier, or doing so on less favourable terms such that it would substantially lessen competition.

“We don’t believe that Woolworths would have the ability or incentive to restrict rival retailers’ access to convenience or ready-meals, nor do we consider any attempt to do so would result in a substantial lessening of competition in relevant retail markets. This is because rival grocery retailers could acquire from alternative suppliers across the relevant product categories. This applies to both branded Beak & Johnston products and private label products manufactured by Beak & Johnston.

“Our investigation considered whether there was a risk of Woolworths either delisting the products of rival suppliers to Beak & Johnston or compromising the attractiveness of their products. Ultimately, we didn’t consider delisting of rival suppliers to be a likely scenario in this case, as Woolworths is unlikely to want to reduce the range of products it sells in these categories, which are generally projected to grow. We also concluded that any efforts by Woolworths to compromise the attractiveness of rival suppliers’ products was unlikely to substantially lessen competition. While we recognise the proposed acquisition may result in Woolworths potentially ranging more Beak & Johnston products, given the limited nature of the range, and the projected growth of the sales of convenience or ready-meals, we don’t believe this will be sufficient to cause competitive harm in the market.

“We saw no evidence to indicate the proposed acquisition would materially change decisions on the ranging, shelf-positioning or pricing of private label and Beak & Johnston branded products in Woolworths stores in a way that would substantially lessen competition.”

A decision to clear this proposed acquisition does not mean that any acquisition of a supplier by a major grocery retailer would be similarly approved, as each merger or acquisition is assessed by the Commission on its own merits. A decision whether or not to give clearance to the proposed acquisition would be based on the specific facts in this case.

A public version of the written reasons for the decision will be available on the Commission’s case register in due course.

Background

We will only give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.

Further information explaining how the Commission assesses a merger application is available on our website.

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