ACCC v Metcash Trading Ltd: Undertakings, balance of convenience and damages

Yesterday, the Federal Court of Australia denied the application of the ACCC for an interlocutory application restraining Metcash from purchasing Franklins and expedited the appeal hearing in the case of Australian Competition and Consumer Commission v Metcash Trading Ltd [2011] FCA 1079.

The ACCC claimed that a proposed share sale agreement between Metcash Trading and Pick n Pay violated Section 50 of the Trade Practices Act 1974 by substantially lessening the competition in the market. The share sale agreement, if it had gone through, would have entitled Metcash Trading to buy Pick n Pay’s interests in the shares of the supermarket retailer, Franklins.

Although the ACCC’s applications were rejected by the primary judge, this application for injunctive relief was brought under s 80 of the Competition and Consumer Act 2010, pending the appeal and raised the issue that the ACCC did not offer any undertakings as to damages as a condition of the grant of interlocutory relief.

This decision also raises some interesting questions about stated intentions of corporations to leave Australia as a place of business and also about availability of shares to third party buyers. Ultimately the court has let the transaction proceed giving weight to the primary trial judge’s views that the proposed share sale agreement is actually pro-competitive.

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