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

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Broker Notes

Guess which ASX 300 stock was downgraded to sell today

Bell Potter has become bearish on this stock. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX gave up an afternoon lead to close lower today.

Read more »

a gas worker with hard hat and high visibility vest stands cross armed and smiling in front of an elaborate steel structured gas plant.
Share Market News

Morgans names 2 ASX energy shares to buy now

These shares could be top picks for investors with a high tolerance for risk.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Broker Notes

Is the ResMed share price still cheap? What the numbers say

Let's see what analysts are saying about this blue chip as it nears a 52-week high.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Broker Notes

What does Macquarie think REA shares are worth?

Top broker Macquarie has reviewed its rating and price target on REA shares.

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Aurelia Metals, Centuria Office, Meeka Metals, and Resolute shares are tumbling today

These shares are having a tough time on Thursday. Let's find out why.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Clarity Pharmaceuticals, Kelsian, Life360, and Syrah shares are rising today

These shares are pushing higher on Thursday. But why?

Read more »

Woman checking out new TVs.
Broker Notes

Does JP Morgan think JB Hi-Fi shares can keep rising?

The retailer is up 16% for the year to date.

Read more »