The Trade Practices Commission granted authorisation for Davids Ltd to acquire the shares and securities of Composite Buyers Ltd (CBL). Both were in the business of wholesale grocery distribution. QIW applied for a review of the Commission's decision.

The Tribunal concluded the merger would not be anti-competitive and that authorisation should be granted. The Tribunal varied the determination of the Commission by authorising Davids to acquire all issued shares and other securities in CBL, provided the acquired at least enough to enable Davids Ltd to cast more than 50% of votes at general meetings of CBL, and otherwise no condition was attached to the authorisation.

[At ATPR 40,967; ALR 284] "The proposed merger would have no anti-competitive or any other detriment. The relevant wholesaling sub-markets are subject to competitive discipline from the market as a whole, which is the Australia-wide market for grocery distribution. The proposed reduction in the number of wholesalers in New South Wales and Victoria from two to one would be subject to the same competitive discipline and would have no anti-competitive or other detriment. In fact, it would be pro-competitive as it would improve the results to which the competitive process gives rise."

Market definition

On the issue of functional market definition, the Tribunal, noting that 70% of turnover at wholesale level of that market passed through vertically integrated supermarket chains and concluded (at 266):

In summary, there is an Australia-wide or national market for the distribution of grocery products to the consuming public via integrated retail chains and independent wholesalers supplying independent retailers. We distinguish two wholesale sub-markets of relevance to this application, namely, transactions between independent wholesalers and independent retailers in (1) the New South Wales region and (2) the Victorian region. We use the term “sub-market” to refer to a field of rivalry that is 'especially close or especially immediate' reflecting 'some discontinuity in substitution possibilities': Tooth & Tooheys at 18,197; QCMA at FLR 190; ATPR 17,247. In specifying these wholesale sub-markets we have, in effect, made two “cuts” in the pattern of substitution within the market as a whole: a functional cut to separate certain wholesale transactions between independent wholesalers and independent retailers, and a geographic cut to separate certain transactions within the independent sector that centre upon the geographic pattern of physical distribution. There are also retail submarkets whose functioning has significance for this application. We do not regard the various sub-markets as separable markets, however, for the activities concerned are subject to the ultimate discipline of pervasive competition with the national integrated chains.

For QIW

• GA Thompson

For Davids

• JD Heydon QC
• AJ Meagher

For the Trade Practices Commission

• AI Tonking