Johannesburg - Australia's antitrust watchdog began legal action to block Pick n Pay Stores'
[JSE:PIK] sale of its Franklins stores in that country to retailer Metcash, a move the South African firm said makes little sense.
Pick n Pay has agreed to sell its Franklins supermarket chain to Australia's Metcash for A$215m, to enable it to focus on pursuing growth closer to home.
But the Australian Competition and Consumer Commission, which says the deal would give Metcash a monopoly on grocery wholesaling in New South Wales, began legal proceedings to block the deal.
Pick n Pay chairperson
Gareth Ackerman disputed that Metcash would gain a monopoly, citing the strength of rival retailers Coles and Woolworths Holdings
[JSE:WHL].
"It seems contrary to common sense to suggest that the sale of 1% of the national grocery market to the number three player, in a market that is more than 75% dominated by Coles and Woolworths, could substantially lessen competition," he said.
The commission has opposed several deals over the past year - including National Australia Bank's $12bn bid for wealth manager AXA Asia Pacific - and has raised concerns that Japan's Asahi Breweries' A$364m acquisition of P&N Beverages Australia could hurt competition in the carbonated drinks market.
Pick n Pay shares were up 1% at R49 in early afternoon trade on Wednesday, outperforming Johannesburg's flat All-share index.