Court overturns Pick n Pay sale hurdle
Fin24 - Dec 1st 2011, 08:44
An Australian court overturned a decision by the country's competition watchdog to block wholesale firm Metcash buying stores from South Pick n Pay Stores [JSE:PIK] - a precedent that may make it harder to challenge future deals.
The regulator, the Australian Competition and Consumer Commission (ACCC), has said the overturning "could have serious implications for the ACCC's ability to block anticompetitive mergers".
ACCC chairperson Rod Sims declined to comment after the court decision on Wednesday.
"It does maker it harder for the commission. This judgment clarifies the meaning of the act and requires the commission to apply the law... and that is a harder legal test than the commission had previously anticipated," said Russell Miller, head of the Australasian Competition Group at lawyers Minter Ellison.
The ACCC sought an injunction in the Federal Court in December last year to prevent the proposed acquisition proceeding, saying it was "likely to result in a substantial lessening of competition".
This week, the ACCC postponed a decision on pay-TV group Foxtel's $1.92bn bid for rival Austar, at Foxtel's request.
The six-month-old bid to form one of Australia's largest media businesses, with anticipated revenue of more than $2.8bn, raised concerns in July that the merger would create a monopoly.
Miller said the Metcash case may set a precedent for litigation.
"What you can read into it is that if the commission were to decide to reject it... the Foxtel parties may well be more encouraged to take proceedings to challenge it," said Miller.
Foxtel, owned by Telstra Corp, Rupert Murdoch's News Corp and James Packer's Consolidated Media Holdings, have argued the commission's view is too narrow, as they are now competing against expanded free-to-air TV stations and online entertainment.
Austar's majority shareholder Liberty Global last week won US approval for the tax treatment of the deal.
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