ACCC to look into Kaufland supplier exit claims

There are claims that Kaufland decided not to open in Australia because suppliers were afraid of Coles (ASX:COL) and Woolworths (ASX:WOW).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

The ACCC is going to investigate claims about why Kaufland decided to abandon its plans in Australia.

You may have seen that German retailing giant Kaufland has decided to pull out of Australia before it had opened a single door to customers.

It seemed like an odd decision. Why quit when you've put money into hiring hundreds of employees, choosing over 20 sites for stores and starting work on a distribution centre?

According to Australian Financial Review reporting, it wasn't just because Kaufland wanted to concentrate on Europe.

The Australian Competition and Consumer Commission (ACCC) is going to look into claims that major food suppliers were not going to supply Kaufland because they were worried about retribution from Woolworths Group Ltd (ASX: WOW) and Coles Group Limited (ASX: COL).

According to one supplier, Kaufland apparently saw that it wouldn't have been able to secure the best supply deals, which would have led to losses for a number of years for the retailer.

Speaking to the AFR, ACCC chairman Rod Sims said: "We'll definitely have a look at this. Agreements between competitors not to supply certainly raises cartel concerns and the law is pretty clear on this. Even if it's less than [cartel behaviour] you can also deal with it now under concerted practices.

"We would be extremely keen to talk to anybody who has any information about this, we have very sophisticated processes for protecting the identity of anyone who does come forward."

It remains to be seen which suppliers are being looked into, but it could relate to one or more ASX food suppliers as there are several large ones on the stock exchange.

Foolish takeaway

Coles, Woolworths and Metcash Limited (ASX: MTS) are definitely beneficiaries from Kaufland not opening. Margins will be higher than they would have been, but I don't think that any of them are going to be fantastic investments from here due to the low growth.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Person handing out $100 notes, symbolising ex-dividend date.
Share Market News

$20,000 invested in CBA and these ASX 200 shares 5 years ago is worth

Did these shares deliver the goods for investors? Let's find out.

Read more »

a business person checks his mobile phone outside a Wall Street office with an American flag and other business people in the background.
Share Market News

Is the 'sell America' trade back?

Institutional investors appear to be at odds with retail investors.

Read more »

Unsure man analysing data on laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing end to a disappointing week for investors this Friday.

Read more »

Six smiling office colleagues stand in a row and look at the camera.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why ANZ, Clarity, IGO, and Pilbara Minerals shares are dropping today

These shares are ending the week in the red. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Betr, Centuria Capital, GR Engineering, and Mach7 shares are pushing higher

These shares are having a good finish to the week. But why?

Read more »

woman holding 'hiring' sign in shop
Broker Notes

How much upside does Macquarie tip for Seek shares?

The broker recently reviewed Australian job ad volumes for May.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Broker Notes

Macquarie tips 50% return for this cheap ASX All Ords stock

Let's see which stock the broker is feeling bullish about this week.

Read more »