The battle over Metcash’s proposed acquisition of supermarket chain Franklins has taken another turn, with the revelation in the Federal Court yesterday that Franklins could not keep trading into next year on its own due to financial troubles.
The case between the Australian Competition and Consumer Commission (ACCC) and the owner of Franklins, Pick n Pay, has reached the Federal Court after a bid by the ACCC to have the acquisition disallowed was overruled.
The ACCC is now appealing the decision on the grounds that the purchase would severely damage the sector, with small retailers unable to compete with the big chains.
Metcash said it would be continuing with the planned takeover despite the ACCC’s objections, causing the ACCC to seek an injunction.
In court yesterday Franklins barrister John Griffiths Franklins is not trading well and “the picture is not a bright one.”
It is “all downhill,” he said, with a “bleak” future and much “doom and gloom,” according to an affidavit from acting Franklins chief executive Roni Perlow.
Allan Myers, barrister for the ACCC , said an expedited hearing, which has already been requested by Pick n Pay, would solve the issue.
Myers said while Franklins will struggle with trading in the coming year, the report from Perlov “does not say that they’re going out of business, he just says they’re losing some money.”
Myers said the affidavit’s findings that “we can’t hang on beyond the end of the year without taking further steps” was speculative and suggested it simply needs “new bank facilities.”
Judge Jacobson said it is a “very different market at the moment.”
His ruling on the injunction will be issued early next week.
Image: The Herald Sun