I've been reviewing the ACCC v Metcash judgement and it's worth...

  1. 2,369 Posts.
    I've been reviewing the ACCC v Metcash judgement and it's worth highlighting some key points from the judge's decision.

    -'Franklin's has accumulated losses of $105.1 in seven of the last 10 years.'

    -Metcash's tried to charge a 10 cent 'service fee', but after stiff opposition had to accept a 5 cent service fee.

    -ACCC's definition of the market changed during the course of the trial, raises major issues for the ACCC in proving that Metcash dominate a 'market' i.e. which market would Metcash dominate?

    The combination of Metcash's inability to raise prices to the desired levels and Franklin's years of accumulated losses unquestionably demonstrate that neither company has market power or has the potential to dominate the market as suggested by the ACCC. Any potential price rises by Metcash could only offset the only ongoing losses by Franklins/

    An article from Saturday's AFR Chanticleer, p64, 'ACCC Risky for All' supports the above analysis
    while making the following points-that the ACCC's entire argument was 'rejected with great clarity and much force', indeed the ACCC strenuously argued that there were other credible bidders, but in nine months of legal proceedings none has emerged.'

    As demonstrated by the massive accumulated losses by Franklin's ($105.1m) the ACCC is in effect potentially destroying the only credible threat that Coles and Woolsworths ('the duopoly') face. Given the financial uncertainty facing Franklin's, there is a real possibility that Franklin's will have to start selling key sites to the duopoly just to maintain its solvency. This can only further entrench the stranglehold that the duopoly already enjoy.

    In this context it is highly likely that the ACCC will effectively destroy the duopoly's only credible competitor!!
 
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