The Australian Competition and Consumer Commission has expressed its concern over a proposed tie-up of grocery wholesaler Metcash Ltd (ASX:MTS) and supermarket chain Franklins.
In a statement of issues released yesterday, the watchdog said Franklins wholesale division is the only alternative grocery supplier for independent supermarkets in NSW.
This has raised concern among other market participants that Metcash will have the power to drive prices higher.
The ACCC says it is also concerned that the merger would erase any possibility in the foreseeable future, of a new entrant in the market for the wholesale supply of packaged groceries to independent retailers in NSW.
In July Metcash, who supplies IGA independent supermarkets, launched a $215 million takeover bid for Franklins.
Metcash booked a $230.3 million profit for the year to the 30th of April 2010.
MTS Price at posting:
$4.42 Sentiment: None Disclosure: Held
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