ACCC says tougher competition laws would have stopped pet shop empire debacle

The unchecked growth of a national pet shop empire is among a raft of “damaging deals” Australia’s newly-empowered competition boss says were the lightning rod to push for tougher takeover new laws introduced today.

Australian Competition and Consumer Commission chair Gina Cass-Gottlieb said the introduction of a huge takeovers reform Bill on Thursday was the “day the ACCC has been seeking” and will give it new tools to oversee all mergers deemed a threat to competition in the market.

Supermarkets and retailers were squarely called out ahead of the introduction of the Bill by Federal Treasurer Jim Chalmers, who said too many potentially damaging mergers were “slipping through the cracks”.

Asked for examples of takeovers the ACCC had missed in the past, but would be able to capture under new laws, Ms Cass-Gottlieb pointed to the expansion of Victoria-founded Petstock. “Petstock amassed the second largest chain of pet products across Australia with no notification whatsoever to the ACCC. We saw it when a large listed company, Woolworths, notified it to take a shareholding in it,” she said.

Woolworths spent $586 million buying a controlling interest in Petstock’s parent group Petspiration in late 2022 as part of a broader push into the lucrative, multi-billion dollar pet care market.

In reviewing the Woolworths deal, the ACCC uncovered Petstock had bought out a raft of rivals in a string of deals not legally required to be reported to the competition authority.

The ACCC forced Petstock to sell 41 retail stores and other assets, clearing the way for Woolworths to pick up half of the business. “The reason we want this merger reform is that it enables us, not afterwards — which is what divestiture powers are about — but before to protect competition,” Ms Cass-Gottlieb said.

“We have examples in cancer radiology, pathology, supermarket acquisitions, petrol station acquisitions, liquor store acquisitions. In every community across Australia there will be happening today transactions that we don’t see.”

A Coles spokeswoman said the company was “committed to supporting a healthy, competitive market”. “We are currently reviewing the Government’s proposed merger laws announced this morning,” she said.

Business Council of Australia chief executive Bran Black called the proposed changes “a step in the right direction” compared to the first proposal, which considered introducing percentage based “market concentration thresholds”.

“These are significant national reforms and the proof in the pudding will be in their implementation,” he said.