Woolworths' ambition to secure a majority stake in Petstock, the second-largest specialty pet retailer in Australia, has been met with scrutiny from the Australian Competition and Consumer Commission (ACCC). The $586 million deal for a 55% stake, announced last December, has prompted concerns about excessive consolidation in the pet retail market.
The ACCC has been investigating the competitive impact of this merger since January. As part of their review, they uncovered undisclosed acquisitions by Petstock between 2017 and 2022. These acquisitions only came to light during the review process, leading to further concerns about market dominance.
In response to these concerns, Petstock proposed divesting stores from some of its entities on Thursday. The proposed divestments include 10 out of 15 Pet City stores in Western Australia (WA), the entire Petstock Osborne Park brand, its online store, and two Queensland stores. Also on the list are the Best Friends Pets and OurVet brands, which encompass their websites, 26 stores, and 25 co-located vet hospitals on the East Coast.
The ACCC has expressed specific concerns about Petstock’s acquisitions of Best Friends Pets, Pet City, Animal Tuckerbox in Tasmania, and Pet and Aquarium Warehouse in Melbourne’s outer north-east. These transactions have raised significant concerns within the ACCC due to their impact on competition at both national and state levels.
To address these issues, Woolworths and Petstock have offered court-enforceable undertakings under ACCC's merger laws. This includes close collaboration with the founders of the Petstock Group. However, ACCC commissioner Stephen Ridgeway warned that public consultation on the proposed divestiture does not guarantee acceptance of any form of remedy.
Woolworths clarified that these transactions occurred before its agreement to acquire a 55% stake in Petstock. The company's aim to expand its footprint in pet supplies and retail is in line with the growth potential of the sector, as more Australians own pets and increase their spending on them. This mirrors rival Wesfarmers’ strategy to stock pet supplies in its Bunnings stores.
The ACCC has the power to enforce court-ordered divestiture of shares or assets that breach merger laws, with penalties applicable up to six years later. The ongoing investigation into Petstock’s undisclosed acquisitions has resulted in proposed divestments of several Petstock-owned properties and brands.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.