Woolies' new landlord? Coles

The battle between supermarket giants Coles and Woolworths has escalated, with Coles using an elaborate tax haven structure to conceal its purchase of one of Woolies' most profitable stores.

Fairfax Media has obtained documents that reveal its arch-rival Coles is now the landlord of its supermarket in Sydney's Neutral Bay.

The move has blindsided Woolworths, which was unaware that one of its most profitable stores was bought by Coles for $40 million.

''This is a surprise, and it's not common practice by any means. I'm not going to commentate on what Coles' motivation is. That's for them to answer,'' a Woolworths' spokeswoman said after Fairfax Media informed the group.

Coles concealed its involvement in the deal by using a $10 company ultimately owned in the British Virgin Islands - a tax haven - to purchase the 4282-square metre Sydney site.

Internal Coles documents show the purchase price was $40 million, a record price for a freestanding supermarket in Sydney. Coles is believed to have paid a premium of as much as 30 per cent above its value to secure the site.

Coles confirmed it had bought the property but declined to comment on what its plans were.

The lease on the Neutral Bay location expires next year but can be renewed for 10 years. Under the terms of the lease the landlord - Coles - has the right to inspect Woolworths' sales records and the site.

Five days before the property was bought, a handful of Coles property executives were instructed to investigate whether the supermarket giant would open itself up to retaliation from Woolworths when their own property leases expired.

The analysis is believed to have flagged that 120 stores with turnover of $3 billion were potentially vulnerable. Each property was assigned a risk rating.

The supermarket giants have been locked in a vicious battle for market share since Coles was bought by listed conglomerate Wesfarmers five years ago. It has resulted in price wars including $1 a litre milk and steep discounts on bread, petrol and beer that have antagonised suppliers and resulted in an investigation by the Australian Competition & Consumer Commission.

The property fight is believed to have been sparked after Woolworths bought Coles' store in Katoomba in 2000 and then turfed them out in 2012 after 30 years in the spot.

Coles was forced to spend millions of dollars building a new centre down the road in an exercise that took almost a decade to complete.

A source said: ''It was a disaster. They ended up in an inferior location with less turnover and its competitor Woolworths now in the Katoomba catchment.''

Coles retaliated in late 2011 when NSW-based company Vanbridge put the Neutral Bay property occupied by Woolworths for sale.

Records show that Vanbridge bought the Neutral Bay site in 1992 for $12.27 million and sold it almost 20 years later to Sino Ace Investment.

Sino Ace Investment is registered to Bernard Chiu, a Sydney lawyer who listed a ''palatial'' home in Sydney's lower north shore for $13 million four months after the Neutral Bay deal with Vanbridge.

The company is ultimately owned by a similarly named entity in the British Virgin Islands.

When contacted to explain his role in the transaction Mr Chiu hung up twice and said, ''Contact the vendor.'' Vanbridge did not respond to requests for comment.

theage.com.au 23 Mar 2013

In Australia, in the land of 'monopolies', and a legally accepted corporate structure, come more news of tax evasion and fraud.

 

Corruption in the ACCC leads to companies form alliances  to the detriment of the consumer.

The authorities will jump on the propaganda bandwagon, to make the uneducated masses believe that there is a 'war' on competition for your dollar.

What a farce!