The Australian Competition and Consumer Commission will not oppose the proposed acquisition of Howard Smith by Wesfarmers, ACCC Chairman, Professor Allan Fels, said today.
Wesfarmers announced a full takeover offer for Howard Smith on 13 June 2001.
"The primary area of competitive overlap between Howard Smith and Wesfarmers is in the retailing of home improvement, home leisure and building products, often loosely referred to as hardware", ACCC Chairman, Professor Allan Fels, said today. "Wesfarmers is the owner of the Bunnings chain of hardware stores, and Howard Smith is the owner of BBC Hardware and BBC Hardwarehouse chain of hardware stores.
"The ACCC has conducted extensive market inquiries into this proposed acquisition, consulting with a wide range of suppliers, competitors and customer organisations.
"The ACCC specifically examined the question as to whether the retailing of hardware from a warehouse style format, as pursued by Bunnings and BBC Hardwarehouse, constituted a separate and distinct product market from other forms of hardware retailing. Material obtained during market inquiries suggests that the smaller and more traditional hardware stores do compete effectively against the warehouse retailers. There are around 1,200 independent hardware retailers, in addition to a number of small retail hardware chains, and two major retail hardware chains in Mitre 10 and Danks (Home Timber & Hardware, Thrifty Link Hardware and Plants Plus Garden Centres).
"The ACCC also found that the merged entity would face continuing competition from a large number of category specialty retailers, particularly in the product lines of paint, gardening and nursery products, and plumbing.
"BBC Hardware/BBC Hardwarehouse and Bunnings are two of the largest hardware retailers in Australia. BBC Hardware/BBC Hardwarehouse has its strongest retail presence in New South Wales and Queensland. On the other hand, Bunnings has its strongest retail presence in Western Australia and Victoria.
"The ACCC found that the geographical overlap between BBC Hardware/BBC Hardwarehouse and Bunnings is not significant, and the proposed acquisition did not cross the ACCC's concentration thresholds for the exercise of market power in any state.
"In its consideration of this proposed acquisition, the ACCC also noted the major expansion plans announced by Mitre 10 in late May. Mitre 10 is another major retailer of hardware products across Australia.
"Given the fairly sparse geographic overlap between BBC Hardware/BBC Hardwarehouse and Bunnings, the ACCC concluded that the proposed acquisition of Howard Smith by Wesfarmers is unlikely to result in a substantial lessening of competition".