Wednesday, February 28, 2024

Woolworths’ acquisition of Petstock approved

The ACCC will not oppose Woolworths’ proposed acquisition of a 55% controlling interest in Petstock.

It says it has accepted a court-enforceable undertaking from the specialty pet retailer to divest a package of sites and assets, including 41 retail stores.

“After extensive consultation with market participants and a comprehensive review of the parties’ internal documents, data and research, we consider Woolworths’ proposed acquisition of a 55% interest in Petstock is unlikely to substantially lessen competition,” says ACCC Chair Gina Cass-Gottlieb.

“Market feedback indicated that specialty pet retail and grocery are distinct channels in the pet industry, and specialty pet retail stores have a very different product and service offering to supermarkets and discount department stores.”

Shortly after the ACCC commenced its review of Woolworths’ proposed acquisition of a majority interest in Petstock, it emerged that Petstock had completed a “large number” of acquisitions in the pet industry in recent years that hadn’t been notified to the ACCC.

After investigating these previous acquisitions, the ACCC had “significant concerns” that Petstock’s acquisitions of the Best Friends Pets, Pet City, and Animal Tuckerbox chains and the Pet & Aquarium Warehouse store in Eltham, Victoria may have contravened the Competition and Consumer Act.

“Petstock’s acquisitions removed some of the few remaining chains of specialty pet retail stores that competed against Petstock and Petbarn,” says Ms Cass-Gottlieb.

The ACCC also had concerns Petstock had acquired its closest competitors in several local markets in Victoria, Western Australia, NSW, the ACT, Queensland and Tasmania.

After the ACCC raised these competition concerns with Petstock and Woolworths, they each offered to provide court-enforceable undertakings to resolve the concerns.

“Under the current informal merger regime in Australia, there’s no law requiring merger parties to notify the ACCC of proposed mergers and acquisitions or to wait for clearance before they can proceed,” says Ms Cass-Gottlieb.

“The ACCC needs better laws to enable it to become aware of and properly scrutinise mergers before they occur, and to prevent those likely to substantially lessen competition.”

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