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Shane Young (pictured in 2010) founded PETstock with his brother more than 30 years ago.Credit:James Davies

“During the current Woolworths,PETstock merger review,market participants expressed concerns about the already significant consolidation that had occurred within specialty pet retail in recent years,” said ACCC commissioner Stephen Ridgeway.

The ACCC said on Thursday that it was now seeking public feedback on an offer by PETstock to divest stores across some of the pet supplies businesses it owns,with the watchdog noting it only learnt of these acquisitions during its review of the Woolworths deal.

Over the years,PETstock had acquired Best Friends Pets,Pet City,Animal Tuckerbox and Pet and Aquarium Warehouse,but did not notify the ACCC.

To placate the ACCC,Woolworths and PETstock have offered to sell 41 retail stores,25 veterinary hospitals,four brands and two online retail stores that are under PETstock ownership.

But the competition watchdog said it had “particularly significant concerns” that the four acquisitions “may have contravened section 50 of the Competition and Consumer Act”.

“Our investigation so far has identified significant concerns with these four transactions in particular because of their impact on national and state-wide chain-on-chain competition,as well as competition in multiple local areas,” Ridgeway said.

The ACCC is now seeking submissions on the proposed sell-off of these assets in light of the four unauthorised acquisitions that the watchdog “considers raise significant competition concerns”.

There is no mandatory requirement for merger parties to tell the ACCC,which Ridgeway said was a demonstration of the limitations of the current merger rules.

“While the ACCC has decided to publicly consult on the proposed divestiture,this should not be interpreted to mean that this or any other form of remedy will ultimately be accepted,” Ridgeway said.

A Woolworths spokesperson said all of PETstock’s former acquisitions flagged by the ACCC occurred before the supermarket giant agreed to acquire a controlling stake in the pet retailer.

“Woolworths Group remains focused on working with the Petstock Group founders to complete the proposed acquisition and will engage with the ACCC as part of this consultation to ensure all regulatory approvals are in place prior to completion,” the spokesperson said.

A PETstock Group spokesperson also noted the ACCC’s consultation on the proposed divestment package.

“We are continuing to work with the ACCC on this matter,and during this time all sites will continue to operate with our ongoing support. We remain committed to the care of all stores and each and every team member.”

Woolworths sold a 5.5 per cent stake in liquor and gaming giant Endeavour Group to help fund its $586 million foray into the pets space last December,at a time when other retail giants were also looking to capitalise on the post-pandemic boom in pet spending.

Wesfarmers DIY chain Bunnings has also made asignificant push into the pet supplies market,expanding its range of animal products to 1000 products from late March.

Woolworths chief Brad Banducci has been bullish on the potential for growth in the pet sector,where services span from toys and food to veterinary care and dog daycare.

“There is an amazing array of services that can be provided... there is certainly more than meets the eye,” he said last year.

But scrutiny from the competition watchdog has pushed out the expected timelines for the deal,which Woolworths told investors in December last year was expected to be completed by the middle of 2023.

Woolworths shares started the day down 0.7 per cent to $37.02 just after 11.00am.

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