9 December 2022

Proposed takeover of local supermarket could lead to higher prices, Queanbeyan fears

| James Coleman
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IGA Karabar

SUPA IGA Karabar. Woolworths first sought to buy the Karabar site in 2008. Photo: Australia 247.

Australia’s competition watchdog is concerned Woolworths’ proposed takeover of an IGA supermarket in Queanbeyan will jack up grocery prices and cut down consumer choice in the area.

Earlier this year, supermarket giant Woolworths floated plans to buy out SUPA IGA Karabar and replace it with a Woolworths Metro store. A neighbouring liquor store, Liquor Boss, would also be absorbed.

The Australian Competition and Consumer Commission (ACCC), concerned by the move, turned to the community for their thoughts on the proposed acquisition. These submissions, compiled into a statement of issues and released on 8 December, outline how it is “likely to substantially lessen competition” in the area.

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Woolworths already operates two supermarkets within a 5-kilometre radius of the 840-square metre site at the Karabar Shopping Mall, in both Queanbeyan and Jerrabomberra. For context, rival chain Coles operates only in Queanbeyan, while ALDI has supermarkets in Queanbeyan and Jerrabomberra.

It isn’t the first time Woolworths has tried to purchase the site. In 2008, when it was a bigger 1250-square-metre supermarket trading under the Supabarn banner, ACCC opposed the proposal on similar grounds.

“Competition between supermarkets is important in ensuring different product ranges, promotions and service offerings,” ACCC Commissioner Liza Carver said.

The ACCC sought views about the distances consumers in the area typically travel to visit supermarkets and bottle shops, as well as the likely impact of the acquisition on pricing or promotions between local stores.

It also wanted to know which businesses are considered the closest competitors to SUPA IGA Karabar.

The responses suggest the Woolworths acquisition would remove the only independent supermarket and leave the supermarket giant with more than 50 per cent of the local market share. This may lead to “a material reduction in choice for consumers”.

READ ALSO ACCC looks at Woolworths’ proposed takeover in Queanbeyan

Many local customers are willing to pay a premium to shop at Karabar “due to the store’s product range, quality and service levels”. Other submissions outlined fears that some items, currently cheaper at SUPA IGA, would quickly rise in price once Woolworths took over.

The ACCC is also investigating the impact of the acquisition on other independent supermarkets in the region. Removing the Karabar store from the IGA network would also remove it as a wholesale customer of Metcash, one of Australia’s leading wholesale grocery distribution companies.

In turn, this could impact the “efficiency and competitiveness of other stores that operate under the IGA banner, or receive supply from Metcash”.

The ACCC will make a final decision on 23 March 2023.

In the meantime, it invites submissions from interested parties in response to the statement of issues by 12 January 2023. Customers of the SUPA IGA and Liquor Boss at Karabar are also invited to complete a short survey on their shopping habits.

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