The Federal Court ruled on Wednesday in favour of Metcash in its $215-billion purchase of Franklins supermarkets. The decision was a humiliating defeat for the Australian Competition and Consumer Commission (ACCC) which opposed the takeover.

It is the third federal court ruling in favor of Metcash, the country's largest grocery wholesaler. With the decision, Metcash could position IGA and Franklins to compete against major Australian retailers Coles and Woolworths.

The ACCC was against the buy-in because of the possibility that Metcash would monopolise wholesaling in the independent supermarket sector. The competition regulator said it is studying the federal court ruling so it could decide if it would appeal the case to the High Court.

Besides rejecting the ACCC's position, the court also ordered the watchdog to shoulder the cost of the litigation estimated at over $20 million.

"It's been found to be a pro-competitive deal twice, so for the sake of testing legal principles, what's going to happen if Woolworths and Coles get bigger, the taxpayer pays and I think that's un-Australian," The Herald Sun quoted Metcash Chief Executive Andrew Reitzer.

Mr Reitzer said IGA would give brand labels a push by adapting Franklins' house-brand products to meet shoppers' demand, but would not add generic items to match Coles and Woolworths. He said the two retailers would not delist any brand because Australian consumers trust brands.

News of the court victory resulted in Metcash shares going up by six cents or 1.51 per cent to $4.03 per share.

On Wednesday, Metcash reported a 14 per cent decline in its first half profit to $94.4 million because of the impact of price deflation and costs associated with its acquisition of Franklins. Mr Reitzer attributed the sales drop to consumers' preference to buy items on promotion.

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