Platinum Equity - proposed acquisition of OfficeMax Australia

Acquirer(s)

  • Platinum Equity

Target(s)

  • OfficeMax Australia

Market definition

The ACCC did not reach concluded views on market definition, but its review focused on the supply of traditional office products to large commercial and government customers in Australia.

The term 'office products' covers a broad range of different products that are used in an office, whether at home or in a business, or more generally in the workplace. The Penfold Research, Office Products in Australia 2016-18, A market report, defines two broad categories of office products: 'core' and 'non-core' office products. These are also referred to as 'traditional' and 'non-traditional' office products.

Traditional office products include: paper, ink and toner, and stationery, such as writing instruments, labels, envelopes, filing and presentation products and general stationery.

The ACCC's investigation indicated that the supply of traditional office products to large commercial and government customers is characterised by bidding for customer contracts through some form of tender process. It also indicated that large customers typically have distinct demand characteristics, including, in particular, distinct service requirements.

Competition analysis

The ACCC concluded that the acquisition was likely to lessen competition in the supply of traditional office products to large commercial and government customers in Australia. However, it was not satisfied that the proposed acquisition was likely to substantially lessen competition.

The ACCC's review indicated that Winc (formerly Staples), OfficeMax, Complete Office Supplies (COS) and Lyreco were the key suppliers to large commercial and government customers.

COS is an Australian owned and operated supplier of office products to commercial and government customers in Australia. Lyreco is part of a global group of companies that provide workplace supplies to commercial and government customers.

While the proposed acquisition combined the largest and the distant second largest suppliers of traditional office products to large commercial and government customers, potentially reinforcing Winc's position as market leader, on balance the ACCC considered that COS and Lyreco together, combined with the ability of large customers to switch suppliers and purchase 'off-contract', were likely to provide sufficient competitive constraint on the merged entity to prevent a substantial lessening of competition.

In reaching its conclusion, the ACCC's review took into account the following factors in particular:
- Recent successes by COS and Lyreco in winning large customers from Winc and OfficeMax.
- The generally non-exclusive nature of contracts for office supplies with large customers and the ability to purchase off-contract.

The ACCC concluded that if prices and returns were to increase through the exercise of market power by a combined Winc-OfficeMax, it was likely that other existing suppliers of office products would seek to grow their market share.

Statement of issues

Timeline

DateEvent
15/05/2017ACCC commenced review under the Merger Process Guidelines.
02/06/2017Closing date for submissions from interested parties.
05/07/2017ACCC requested further information from the parties. Former provisional date for announcement of findings (20 July 2017) delayed.
19/07/2017ACCC received information from the parties.
24/08/2017ACCC published a Statement of Issues outlining preliminary competition concerns.
04/09/2017ACCC requested further information from the parties.
07/09/2017Closing date for submissions relating to Statement of Issues.
09/10/2017ACCC received further information from the parties.
01/11/2017Former proposed decision date (16 November 2017) delayed to provide time to consider the information provided by the parties.
30/11/2017The ACCC announced it would not oppose the proposed acquisition.