- Adelaide Tools and Oaklands Mower Centre
Bunnings Group Limited proposed acquisition of Adelaide Tools and Oaklands Mower Centre.
Bunnings is a retailer of home improvement and outdoor living products. Adelaide Tools specialises in the sale and service of power tools. Oaklands Mower Centre specialises in outdoor power equipment.
The ACCC expressed a preliminary view in the Statement of Issues that the relevant markets were for:
- the retail supply of tools and equipment in the Adelaide metropolitan region, and/or more localised markets within Adelaide; and
- the wholesale supply of tools and equipment in Australia.
In reaching its final decision, the ACCC concluded that the proposed acquisition is unlikely to substantially lessen competition in any relevant market, however defined, and therefore did not consider it necessary to reach a concluded view on market definition.
The ACCC concluded that Bunnings’ proposed acquisition of Adelaide Tools is unlikely to substantially lessen competition in any relevant market.
Bunnings is the largest tool retailer operating a one-stop-shop warehouse format in Australia. A major part of Bunning’s tool business has been supplying tools and equipment to do-it-yourself (DIY) retail customers. However, in recent years, it has publicly stated an intention to grow its trade customer business and has taken a number of steps towards this objective.
There are a number of specialist tool chains in Australia that are competitors to Bunnings in the retail supply of tools and equipment to trade customers. These chains focus more on trade customers. The largest specialist tool chain is Total Tools, which has 82 stores around Australia, including six in Adelaide. The second largest is Sydney Tools, an east coast based specialist tool chain which has publicly stated that it intends to set up stores in each state and territory of Australia. There are also some state-based specialist tool chains, including Toolmart (WA), Trade Tools (Qld) and Get Tools Direct (Qld), which supply tools and equipment across Australia, including into Adelaide through online sales.
In Adelaide, the three largest retailers of tools are Bunnings, Total Tools and Adelaide Tools. Other competitors include multi-category retailers, such as Independent Hardware Group (Mitre 10, Home Timber & Hardware and True Value Hardware), industry specific retailers, such as Reece and Repco, buying groups, such as Natbuild, and independent small sole-traders.
In the Statement of Issues, the ACCC outlined its preliminary concerns that Bunnings was acquiring one of its two closest competitors for the retail supply of tools in Adelaide and that the combined entity would have a significant market share.
However, after carrying out further market inquiries, the ACCC concluded that it is unlikely that the acquisition would lead to increased prices or reduced service levels. The ACCC considered that the small overall size of Adelaide Tools, the presence of Total Tools and potential presence of Sydney Tools, would mean that a substantial lessening of competition would be unlikely to arise from the removal of Adelaide Tools as an independent competitor.
The ACCC concluded that it was likely that Sydney Tools would expand into Adelaide within the timeframe of the ACCC’s competition analysis, given its stated public intention to expand nationally and other evidence. However, the ACCC acknowledges that at the time of its final decision, the full impact of the COVID-19 pandemic on the economy and market participants is not yet known and it is possible that the entry of Sydney Tools into Adelaide may be considerably delayed or hindered.
As part of its assessment, the ACCC has also taken into account the potential for other state-based specialist tool chains to expand into Adelaide in the coming years.
Bunnings holds significant purchasing power as a purchaser of tools and equipment in the wholesale market in Australia. However, the ACCC found that sales to Adelaide Tools constitute a very small proportion of the key upstream tool and equipment suppliers’ Australian sales. Therefore, any incremental increase in Bunnings’ purchasing power arising from the proposed acquisition is unlikely to be substantial.
The ACCC accordingly concluded that the proposed acquisition is unlikely to substantially lessen competition in the wholesale supply of tools and equipment in Australia.
|05/11/2019||ACCC commenced informal review under the Informal Merger Review Process Guidelines.|
|21/11/2019||Closing date for submissions.|
|22/01/2020||Former provisional date for announcement of findings (30 January 2020) delayed to allow the ACCC more time to review additional information provided by third parties and merger parties.|
|04/02/2020||Former provisional date for announcement of findings (7 February 2020) delayed to allow the ACCC more time to consider the matter.|
|14/02/2020||ACCC published a Statement of Issues outlining preliminary competition concerns.|
|02/03/2020||Former proposed decision date (23 April 2020) brought forward.|
|06/03/2020||Closing date for submissions relating to Statement of Issues.|
|31/03/2020||ACCC announced that it would not oppose the proposed acquisition.|