The Australian Competition and Consumer Commission (ACCC) says it will not oppose the proposed acquisition by Coles Supermarkets Australia of a lease to operate a supermarket at Lakelands, Western Australia, after accepting a court enforceable undertaking.

The undertaking requires Coles to divest its freehold interest in a nearby development at Singleton, WA to a purchaser approved by the ACCC within a specified period.

“The ACCC’s concerns were that the proposed acquisition would have the effect, or would be likely to have the effect, of substantially lessening competition in the local retail supermarket market surrounding the Lakelands site,” ACCC chairman, Rod Sims, said.

“However, these concerns was remedied by the divestiture undertaking. The undertaking creates an opportunity for a viable and long term competitor, other than Coles, to enter the local retail supermarket market,” Sim said.

Coles currently operates a supermarket at Meadow Springs, within 5km of Lakelands, and owns the freehold interest in the retail site at Singleton where it had been planning to operate a supermarket.

By operating a supermarket in Lakelands, in the absence of the undertaking, Coles would be likely to operate up to three full-line supermarkets in the local retail supermarket market in the future once they are all developed.

The only other supermarket in that local market is the proposed ALDI in the Lakelands development, which is not expected to open until late 2016 at the earliest.

As the divestiture undertaking offered by Coles at an early stage addressed the competition concern, the ACCC did not consider it necessary to conduct a full public review of the proposed acquisition.

Section 50 of the Competition and Consumer Act 2010 prohibits an acquisition (including a merger) which is likely to have the effect of substantially lessening competition in any market. The ACCC would oppose an acquisition if it considers the acquisition is in breach of section 50.