The Consortium's Prospects
385 The Commission contends that the Koundouris, Krnc, Karellas and Lionis interests are operated by persons with considerable experience and expertise in the retail grocery business, and who have formulated and continue to formulate plans for the acquisition of Franklins. It says that the Koundouris, Krnc, Karellas and Lionis interests are operated by astute business people who are ready, willing and able to acquire the Franklins business and assets, subject to acquiring the information that would be made available as part of an ordinary due diligence process. The Commission says that there is persuasive evidence that the proposed consortium consisting of those interests intends to acquire the Franklins assets and operate a business supplying independent supermarket retailers in NSW and the ACT in competition with Metcash. It says that the consortium members remain interested, despite the paucity of information provided to them and the apparent attempts by Pick n Pay to dissuade them from showing interest, which attempts include, the Commission says, the misrepresentation of the actual losses being incurred by Franklins. The Commission contends, therefore, that, if an offer were made by the consortium, there is a real chance that Pick n Pay would accept it, because an offer for the whole business would avoid substantial shutdown costs and would offer a faster and cleaner exit than a store by store sale process.
386 The Commission contends that Pick n Pay is most likely to sell Franklins as a going concern. The Commission says that a further store by store sale process would face numerous significant hurdles that render it unlikely as the means by which Pick n Pay will ultimately recover its capital invested in Franklins. It points to the following matters:
The Store Sale Process undertaken in October 2010 would need to be started again if the Commission were to succeed in this proceeding.
The Store Sale Process would face similar competition issues to those that affect the proposed acquisition by Metcash, if it would result in a reduction from two competitors, in the relevant market, to Metcash alone.
Only one of the non-binding indicative offers submitted by Woolworths, Coles and Ritchies is capable of being accepted, because those offers are indivisible and overlap. Even if all of the offers were capable of being accepted, Pick n Pay would be left with a significant number of Franklins Corporate Stores unsold, most of which are presently unprofitable. Additionally, Pick n Pay would be left with an assortment of wholesale and retail assets, such as the No Frills brand, warehouse agreement and agreements with suppliers in respect of which it would not be in a position to realise value, leading to the incursion of shutdown costs.
However, the Commission says that, even if an individual store sale process, as postulated by Pick n Pay, were credible, its outcome is not so certain that the Court would find that an offer by the consortium did not have a real chance of success. The Commission says that, even if Pick n Pay did decide to pursue a store by store sale process, despite the shutdown costs and other hurdles, each of the members of the consortium would be a credible offeror for stores and other assets under that process.
387 The premise for any sale of the Franklins Corporate Stores separately from the other Franklins assets is that the acquisition of Franklins by Metcash does not proceed. That will only occur if the Court concludes that the Metcash acquisition would contravene s 50 of the Competition Act. On that basis, the Commission says, there is every reason to believe that an acquisition by Woolworths or Coles of an individual store that prevents competition in the relevant market, by depriving an alternative acquirer of the opportunity to obtain sufficient of the Franklins assets to allow it to compete in that market, would also be unlawful under s 50 and would be prohibited. Similarly, the Commission says, the 26 per cent ownership stake that Metcash has in Ritchies, together with their binding supply agreement, means that an acquisition by Ritchies cannot be regarded as a new entry by an independent retailer. Therefore, the Commission says, it is credible to conclude that an acquisition by Ritchies would also be unlawful, on the same basis as that upon which it contends that the acquisition by Metcash would be unlawful. Such s 50 concerns add to the uncertainties surrounding the outcome of any renewed store sale process.
388 The acquisition of Franklins by Metcash is only the first step of those to be taken by Metcash, which intends to sell all the Franklins Corporate Stores to independent retailers who will be tied to Metcash for the wholesale supply of packaged groceries. Therefore, the Commission says, alternative offerors could be considered as credible, even if they could not establish that they were the highest offerors in any renewed store sale process that might be undertaken by Pick n Pay.
389 There are various ways in which Pick n Pay could proceed in a new store sale process. It could attempt to sell each store to the highest offeror. Alternatively, it could accept one or more significant offers for a group of stores and then seek to sell the balance of the stores to the highest offeror. For example, Ritchies has bid $90.1 million for 21 stores, exclusive of stock. Accepting that would leave Pick n Pay with 58 stores to sell. Likewise, Woolworths has bid $85 million to $100 million for 26 stores, including stock, and accepting that would leave Pick n Pay with more than 50 other stores to sell. The Woolworths and Coles bids only overlap in respect of three stores. If the Coles bid for eight stores, of $43.728 million plus stock, is added to the mid-point bid of Woolworths for non-overlapping stores, of $54.855 million plus stock, the total is $98.583 million, plus stock, for 31 stores, including the store at Summer Hill. If that exercise is reversed, with the Woolworths bid for all stores added to the Coles bid for non-overlapping stores, the total would be $91.151 million plus stock for those stores. As well as those major offerors, there are many other offerors who made significant bids for particular stores. Many stores attracted multiple bids. Stores that were not the focus of bids from Coles or Woolworths were the subject of significant bids from other offerors.
390 A prediction about who would be the highest offeror for the Franklins assets must be premised on the particular offeror making the highest lawful offer after taking into account the operation of s 50 of the Competition Act. Further, the offers received may reflect strategic value rather than fundamental value. Even in 2007, Pick n Pay considered that a sale to Woolworths, Coles or Metcash would deliver a price that reflected strategic value over and above the underlying value of the Franklins business. The Commission says that it would be erroneous to consider the strategic value to an acquirer as an appropriate benchmark for assessing whether or not the acquisition would lead to a substantial lessening of competition, in circumstances where that strategic value may in fact reflect an ability to benefit from a substantial lessening of competition. In addition, the Commission contends, the Store Sale Process was not itself credible in a commercial sense, because it was driven by lawyers and not by commercial considerations. Therefore, the Commission says, it does not offer a basis upon which to judge the relative merits of the offers received under it. The Commission says that the price achievable by Pick n Pay in a renewed store sale process is not a relevant consideration.
391 The Commission says that the difficulty faced by the prospective consortium is that the Store Sale Process was itself uncertain. The Commission says that, by taking control of the process, Pick n Pay seeks to be the gatekeeper of any merger counterfactual that might be considered by the Court. Thus, the Commission says, the provision of insufficient material by Pick n Pay is highlighted by due diligence reservations and conditions precedent in the non-binding indicative offers submitted on behalf of Coles and Woolworths, as well as by the communications associated with the consortium offer, to which I have already referred.
392 The Commission says that the uncertainty concerning the Store Sale Process, including uncertainty about each of the non-binding indicative offers, makes it difficult to draw with confidence any inference as to what is likely to occur if the proposed acquisition by Metcash does not proceed. It is also difficult to conclude, according to the Commission, that an acquisition by the proposed consortium could be ruled out as having a real chance of succeeding, particularly in circumstances where, as the Commission says, Ritchies provides no compelling evidence of being able to fund its offer and none of the other possible offerors has been called to give evidence.
393 The Commission says that Mr Cope's evidence that an offer from the proposed consortium would not be entertained is not persuasive, since Mr Cope conceded that, at the end of the day, Pick n Pay, as a profit-maximising firm, would accept the highest lawful offer. Further, as I have already said, the Commission says that an offer for the whole Franklins business would provide a faster and cleaner exit than a fresh store sale process, and would avoid substantial shutdown costs for Pick n Pay.
394 The Commission says that there are compelling pieces of evidence that there is a realistic possibility, in contrast to a mere possibility, that a wholesale operation conducted by the prospective consortium would be viable, and that such a possibility should not be dismissed out of hand as being based on nothing but speculation or theory. First, the members of the prospective consortium, by pursuing an offer for the Franklins assets, have concluded that the possibility is economically feasible and not merely speculative. The Commission says that the planning engaged in has elevated the possibility well beyond speculation or theory. The views of market participants, the Commission says, should be preferred over the submissions of parties interested in securing the proposed transaction with Metcash. The Commission contends that the evidence of Mr Perlov and Mr Cope that Pick n Pay would not consider the prospective consortium should also be discounted for this reason.
395 The Commission also says that the viability of a wholesale operation conducted by the prospective consortium is supported by the fact that the current volumes of retail sales of the members of the prospective consortium could be added to a sufficient proportion of the volumes of Franklins sales to achieve greater scale than Franklins was able to achieve while operated by Pick n Pay. In addition, the Commission says, the members of the prospective consortium have indicated that they would sell stores to attract franchisees, prioritising independent retailers who would bring extra volume to the proposed wholesale operation. That, the Commission says, is to be contrasted with Franklins' inconsistent strategies. From all of this, the Commission asks the Court to infer that there exists an opportunity for increased scale and a credible opportunity for the viable alternative wholesale supply of wholesale packaged groceries in NSW and the ACT if the proposed acquisition by Metcash does not proceed.
396 There are several reasons, however, why the proposed consortium could not succeed in an offer along the lines foreshadowed by TMT. For the reasons set out below, Pick n Pay is unlikely to accept such an offer from the consortium, and it is difficult to conclude that the proposed consortium is a credible alternative purchaser, either of all of the Franklins Corporate Stores or of a significant majority of them.
397 First, there is no credible evidence to support the proposition that the proposed consortium is likely to make a serious binding offer for all, or a significant part, of the Franklins assets. As I have indicated, many fundamental aspects of its intentions remain unresolved. The Commission's hypothesis involves the formation of a rival wholesale business to Metcash. Thus, the relevant outcome is not only the acquisition of the Franklins assets by the proposed consortium, but also the use of the assets acquired to create a new wholesaling business in competition with Metcash. The formation of such a business would require a great many matters to be resolved and a great deal of work.
398 The proposed consortium is far from having undertaken the detailed steps that will be required. Importantly, no binding offer could be submitted until the following matters were resolved:
the identity of the members of the consortium and the share that each member in the consortium would take;
the corporate structure that would be used to acquire the assets for the consortium;
the terms of any consortium agreement, including the rights and obligations of members of the consortium, the equity structure, voting rights and decision-making process, board representation, transfer of equity interests and provision for exit;
the precise assets that the consortium would wish to acquire;
the price to be paid for the assets to be acquired;
the amount of working capital necessary to operate the business, including expenditure for the improvement of stores;
the funding of the purchase price, including the relative proportions of debt and equity funding;
the numbers of Franklins Corporate Stores that would be retained by the consortium, be sold or be closed down;
how the proposed consortium would obtain landlords' consents and assignments of leases of the Franklins Corporate Stores;
the brand that would be used by the consortium;
the relationship between the consortium members in relation to the operation of a warehouse and distribution assets, and the terms, including pricing strategies, on which any warehouse or wholesale business would supply groceries, both to consortium members and to non-members;
ownership of the warehouse assets; and
the employment of personnel who would operate the warehouse and carry out buying functions.
399 Mr Vasilli Karellas gave evidence that, if the acquisition of Franklins by Metcash does not proceed, he intends to join with Mr Koundouris and others, including Mr John Krnc and possibly Mr Lionis, to acquire a sufficient number of Franklins Corporate Stores, the warehousing system of Franklins and the No Frills brand. However, in cross-examination, Mr Vasilli Karellas agreed that, before putting in a binding offer for the Franklins business, the proposed consortium would need to resolve most of those matters, that there was a lot of work to do, and that the consortium was not yet in a position to commence what was a very detailed process. Mr Koundouris also agreed that there were many matters to finalise.
400 TMT appreciated, as at 4 November 2010, that many significant issues remained to be finalised by the consortium. In late October or early November 2010, Mr Lowrey produced a document dealing with the proposal, which highlights that fact. There is no evidence that any of those matters has subsequently progressed in a material way. Another document, prepared by TMT in November 2010, makes no complaint about inadequacy of information for the purposes of providing a non-binding indicative offer. Rather, TMT acknowledged that it had received standard form information regarding the Franklins Corporate Stores, together with other information specifically requested to assist the development of an offer. TMT's document further noted that certain requested information had not been provided but that TMT had access to the chief executive officer. The TMT document identified certain benefits of proceeding with the "current strategy" of engaging with Blake Dawson, Pick n Pay's solicitors, with a view to making an offer for Franklins. It also identified a significant number of issues with that strategy, including the high levels of risk involved.
401 Secondly, there is no evidence that the consortium has adequate funding to acquire all or a significant part of the Franklins assets, and there is no credible evidence of the capacity of the prospective members to obtain such funding. Specifically, there is no credible evidence to suggest that the prospective consortium could secure funding in the total amount of well in excess of $100 million, which was the amount of funding Mr Koundouris estimated would be required to finance an acquisition with a purchase price of $100 million. There is no evidence that prospective members of the consortium have either collectively or individually approached prospective financiers to ascertain their willingness to finance the possible acquisition of the Franklins business, as distinct from financing the participation by individual consortium members in the acquisition of individual stores, where the relevant amounts involved are much less than the $110 million non-binding offer submitted by TMT. A letter that was sent by the National Australia Bank to the directors of the Koundouris Group on 10 October 2010 falls well short of providing any assurance of funding. No information was provided as to the number of stores or the amount of funding required. The letter simply indicates a willingness on the part of National Australia Bank to consider any detailed requests for funding. Such a letter says nothing about the likelihood of funding.
402 Mr Vasilli Karellas told the Commission in September 2010 that it would be difficult for the consortium to get financing should it decide to make an offer. Mr Koundouris said, however, that he was confident of obtaining funding because his local bank manager told him in 2007, when he was contemplating a possible offer to acquire Franklins, that the bank was willing to look at any deal that he wanted to put together. It is unlikely, however, that Pick n Pay would share that confidence.
403 Thirdly, there remains doubt as to the final membership of the proposed consortium. Mr Koundouris has known Mr Lionis for many years through associations in the grocery industry. Mr Koundouris told Mr Lionis in late 2010 that he was looking at putting together a consortium to make an offer to acquire Franklins in the event that the Metcash acquisition did not proceed. Mr Lionis said that he might be interested in being part of the consortium. Mr Koundouris said that he was sending someone to make enquiries of Franklins' advisers. Mr Koundouris subsequently told Mr Lionis that Franklins was not interested in dealing with them.
404 While Messrs Koundouris, John Krnc and Vasilli Karellas suggested that Mr Lionis was to be a member of the consortium, Mr Lionis said in evidence that, as at 4 November 2010, when the non-binding offer was lodged, he considered that it was more in the nature of an exercise in getting information on the business, with a view to the possibility of putting forward a credible offer. He said that he would need a good deal more information before he was prepared to put in a binding offer for the acquisition of the Franklins business. That supports the conclusion that the lodging of the non-binding indicative offer was merely the first step in the process of engaging with Pick n Pay.
405 Mr Lionis said that there was no consortium at the time that the non-binding indicative offer was submitted to Pick n Pay. Mr Lionis gave evidence of two conversations with Mr Koundouris, to which I have already referred. Mr John Krnc accepted that he does not have a single document relating to his involvement in the so-called consortium, and said nothing in his affidavits about the acquisition of Franklins. Mr Koundouris gave generalised evidence about the making of the non-binding indicative offer on 4 November 2010, and said that Supabarn would be interested in purchasing the whole of the Franklins business, or any parts that might be offered for sale separately if the Metcash acquisition did not proceed, without mentioning any consortium. Mr Vasilli Karellas accepted that, before the consortium could make a binding offer, he and his family members would have to resolve whether they wished to participate. He gave evidence, in general terms, of several meetings with Mr Koundouris and later with Mr Koundouris, Mr Krnc and Mr Lionis. There is no certainty in the terms of the discussions to which he deposed.
406 Some of the individual consortium members say that they are prepared to follow through with the proposal if the Metcash acquisition does not proceed. That, however, does not provide an adequate foundation upon which to conclude that the proposed consortium's interest is credible and is likely to produce a realistic binding offer.
407 Fourthly, Pick n Pay intends to sell the business on a store by store basis if the transaction with Metcash does not proceed. It says that, even if the consortium were to finalise all major outstanding issues and ultimately submit a binding offer, the offer would not be accepted unless it were for an amount that exceeded Pick n Pay's assessment of the likely financial return to it from a disposition on a store by store basis. The non-binding offer of $110 million of 4 November 2010 would, therefore, in all likelihood, need to be substantially increased for the offer to have any prospect of acceptance by Pick n Pay. Mr Cope said that, as a director of Pick n Pay, he would vote against acceptance of the non-binding offer. He said that the $110 million price is markedly inferior to the net financial return that he expects through a competitive store tender process. Further, Mr Cope has serious doubts about the ability of the proposed consortium to complete the acquisition of the Franklins business. He would be concerned about its ability to fund the purchase and replace bank guarantees concerning leases and workers' compensation. Additionally, the absence of any material indicating that the proposed consortium could provide landlords with sufficient comfort to persuade them to consent to assignments of leases means that completion of the transaction would likely be delayed unreasonably.
408 There is really no credible basis for concluding that, if the acquisition of Franklins by Metcash is prohibited, Pick n Pay would wait to see whether the proposed consortium members could resolve all of the matters described above and then proceed to make a binding offer. Even if the proposed consortium did make a binding offer, the high execution risk would make that offer unattractive to Pick n Pay.
409 If the acquisition of Franklins by Metcash is prohibited, then Pick n Pay would need to undertake a renewed store sale process. However, the offers in the original Store Sale Process suggest that it is unlikely that the proposed consortium would be the highest offeror for more than a handful of the Franklins Corporate Stores. When Pick n Pay called for expressions of interest under the Store Sale Process, the Koundouris interests submitted an offer for eight stores, the Karellas interests submitted an offer for 14 stores, and the Krnc and Lionis interests each submitted an offer for fewer than ten stores. The Karellas bid and the Koundouris bid overlapped in respect of every store for which the Koundouris interests submitted an offer. The Krnc interests submitted an offer for three stores for which the Karellas interests did not submit an offer, and the Lionis interests submitted an offer for one further store for which neither the Karellas nor Krnc interests submitted an offer. The Koundouris interests made the top offer for one store, the Lionis interests made the top offer for one store, and neither the Karellas interests nor the Krnc interests made the top offer for any store. Between them, the respective consortium interests submitted bids for a total of 18 stores, one of which was not in fact owned by Franklins. A consortium member was the top or equal top offeror in respect of only two stores. There is no indication that members of the proposed consortium co-ordinated their bidding in any way.
410 On that basis, the respective consortium is unlikely to obtain any material number of stores through a fresh store sale process. That is relevant to the assessment of the Commission's contention that the proposed consortium could be expected to acquire sufficient stores under the fresh store sale process, as opposed to its prospects of acquiring the assets by way of a global bid.
411 The possibility of the consortium succeeding in an offer rests on the prospect of the consortium members offering for substantially more stores in any future store sale process than they have so far. It also rests on the prospect of either the consortium offering more than Woolworths, Coles, Metcash, Ritchies or any other independent retailer who intends to obtain supply from Metcash, or the Commission successfully preventing such entities from obtaining any number of stores that would prevent the proposed consortium members acquiring a significant majority of the stores.
412 Mr Grimwade, the most senior officer of the Commission to give evidence, accepted that the Commission had not yet considered what might happen under a renewed store sale process. He could not give any assurance that the Commission would oppose every sale of a store to any of Woolworths, Coles or Ritchies, and could not say that any particular offeror, including Woolworths, Coles and Ritchies, would be precluded from acquiring stores. The Commission has conducted the case on the basis that it is not necessary for it to carry out any enquiry or adduce any evidence to establish that there would be any contravention of s 50 by such acquisitions.
413 Fifthly, the evidence does not support the conclusion that the proposed consortium, if it acquired the Franklins assets, would establish a viable and sustainable wholesale operation in competition with Metcash. The members of the consortium are retailers, not wholesalers, and it would be necessary to employ people with considerable skill to conduct the wholesale operations. The preliminary work conducted by Mr Koundouris and Mr Lowrey was to the effect that a majority of the Franklins Corporate Stores would need to be sold or franchised to unidentified third parties. There was no evidence as to who those third parties might be or how any franchising business would work. Further, Mr John Krnc gave evidence, which is logical and compelling, that the last thing a retailer would want is to be taking supply from somebody who competed in the marketplace. The Commission places reliance on what is effectively the same point in its contention that Woolworths is unlikely to engage in wholesale supply to independent retailers.
414 Mr Koundouris apparently assumed that the consortium could simply take over any supply contract held by Franklins and thus get the benefit of any terms negotiated by Franklins. However, there is no reason advanced as to why manufacturers and primary suppliers would agree to the novation of their supply contracts to a new entity with no track record in wholesaling. It is more likely that the proposed consortium would need to negotiate new terms, which could well be materially less favourable than the terms under which Franklins operates.
415 The Franklins business has been a loss-making business and there is considerable doubt as to whether it is viable. Franklins has been unable to compete with Coles and Woolworths, and most of its stores are in need of significant work. That is a most unpromising foundation for a new and competitive wholesaling business. Mr Koundouris asserted that the proposed consortium would operate the warehouse as a cost centre plus 2.5 per cent margin. There is no evidence to support the proposition that the warehouse could be operated on that margin, or that the figure has been derived from any calculation. Rather, it appears to be no more than a purely speculative guess by Mr Koundouris.
416 Further, the margin that might be applied by the prospective consortium to the price of packaged groceries acquired from manufacturers and primary suppliers says nothing about the attractiveness of the consortium's prices to independent retailers. Independent retailers would not choose between Metcash and the prospective consortium on the basis of the margin applied to the price for which Metcash and the consortium acquire their products. Rather, they would choose between them based on the price at which those groceries were supplied, and the range of associated services that were offered to support the retailer. There is no evidence as to the net price at which the proposed consortium could or would acquire packaged groceries from manufacturers and other primary suppliers. Further, it is clear that the proposed consortium would be at a significant scale disadvantage to Metcash, and that Metcash would be able to buy on better terms than the proposed consortium. Even if it were possible for the proposed consortium to step into the shoes of Franklins, Franklins has not been able to compete effectively or sustainably with Coles, Woolworths or Metcash. As to associated services, there is no evidence that the proposed consortium could provide any of the various support services provided by Metcash to independent retailers to assist them to compete with Coles and Woolworths.
417 Sixthly, there is no evidence as to who would buy, or take a franchise of, the unwanted Franklins Corporate Stores. Mr Koundouris prepared a two page document concerning Franklins. The document indicated that Mr Koundouris had plans to keep 23 stores, to franchise 45 stores up front for a return of some tens of millions of dollars, and to close 12 stores, the cost of which would be offset by the revenue from franchising the 45 stores. As I have said, Mr Koundouris estimated that the total amount required, for a price of $100 million, was well in excess of $100 million. However, that made no allowance for the stock in the 45 stores to be franchised, nor for any lease guarantees and workers' compensation guarantees, which totalled $27.7 million. Further, there was no evidence as to any plan for franchising, nor as to any consideration having been given to the amount that would be realised on franchising. Franklins was able to produce only ten franchised stores in over five years of effort. The undeveloped plan to franchise 45 stores should therefore be given little weight.
418 There are, accordingly, obvious difficulties with the suggestion that the consortium will franchise the unwanted stores. If the consortium sought instead to sell those stores, the buyers are likely to include Coles, Woolworths, Metcash, Ritchies and other independent supermarket owners who may choose to be supplied by Metcash. There is no evidence as to why the consortium would adopt anything other than a profit-maximising strategy in any store sale process. That, however, is inconsistent with the Commission's contention that all, or a substantial majority by revenue, of the stores would remain owned by third parties and not by the entities I have just mentioned.
419 Finally, the proposed consortium's interest is, at best, speculative. That is to say, its interest is substantially undeveloped. Its primary goal to date has been, clearly enough, to block the Metcash acquisition without spending the money and resources that would be required to demonstrate that it is itself in a position to make a serious, binding offer. The interest of the consortium is driven by strategic considerations aimed at creating an opportunity for it to commence to develop some sort of proposal, the details of which are as yet unclear.
420 In the light of the matters set out above, including the numerous and detailed basic matters still needing to be resolved, such as membership and participation, the lack of any proper business plan, the lack of information as to available funding, the absence of identification of purchasers for the Franklins Corporate Stores to be sold or franchised, and the lack of evidence of experience of consortium members in wholesaling operations, the establishment of a viable wholesale business by the consortium must be regarded as entirely speculative. Further, based on Mr Cope's assessment and analysis of the Store Sale Process, even if a serious proposal could be developed, any such proposal would be likely to produce a lower financial return for Pick n Pay than that expected from a store by store sale process.
421 As well as offers from Coles, Woolworths and Ritchies, Pick n Pay has also received significant offers from Metcash, including an offer for each store. While the acquisition of all of the stores by Metcash would be similar in effect to the acquisition presently under consideration, the acquisition of Metcash of a material parcel of stores is a more likely scenario than any acquisition by the prospective consortium.
422 Mr Cope said that, if Pick n Pay is prevented from completing the sale of Franklins to Metcash, it will sell the Franklins stores individually or in groups in order to realise maximum value from its investment. That evidence has not been materially challenged by the Commission. Accordingly, there is no reason to doubt that Mr Cope would make recommendations consistent with his views and that the board of Pick n Pay Stores would follow his recommendations.
423 If the Metcash transaction does not proceed, the likelihood is that the Franklins stores will be sold in groups or individually to purchasers including Ritchies, Coles, Woolworths and independent retailers. In relation to the stores that are sold to independent retailers, it is likely that those retailers would obtain supply of packaged groceries from Metcash. The Commission has identified no other likely source of supply. Further, the intention of the seller in these circumstances is critical. I am satisfied that it is unlikely that Pick n Pay would enter into any transaction with the proposed consortium.