Company or individual details
- Metcash Limited112 073 480
On 21 July 2016, the ACCC announced it had accepted an undertaking (the Undertaking) from Metcash Limited (Metcash) in relation to its proposed acquisition of Home Timber and Hardware Group (HTHG) (the Proposed Acquisition).
The ACCC was concerned that in the absence of the Undertaking, the Proposed Acquisition would have the effect or likely effect of substantially lessening competition in the:
- national or regional markets for the wholesale supply of hardware and home improvement products to independent (non-vertically integrated) retailers;
- local markets for the retail sale of hardware and home improvement products; and
- national or regional markets for the wholesale acquisition of hardware and home improvement products from manufacturers and suppliers.
HTHG is Metcash’s closest competitor, due to the similarity in services that both parties provide. The ACCC was concerned that for a significant proportion of independent retailers the Proposed Acquisition would combine the only two independent wholesalers that offer a broad range of hardware and home improvement products. The ACCC’s market inquiries indicated that independent retailers can and do switch between Metcash and HTHG to secure better price and non-price terms. This would no longer be an option after the Proposed Acquisition.
The ACCC considered that the elimination of competition between Metcash and HTHG could lead to the following effects:
- increased wholesale prices (including reduced rebates) or decreased services to independent retailers supplied by Metcash (both bannered and unbannered);
- increased incentive and ability for Metcash to discriminate against independently owned retailers where a Metcash joint venture or corporate-owned store competes against an independently owned store supplied by Metcash;
- muted retail competition between retailers who would otherwise be supplied by Metcash and HTHG in competition with each other – the proposed acquisition may impede retailers’ ability to compete with each other by differentiating their offers, including by seeking other sources of wholesale supply; and
- the removal of HTHG as a significant distribution channel for manufacturers and suppliers of hardware and home improvement products.
The objective of this Undertaking is to address the ACCC’s competition concerns as set out above that would be likely to otherwise arise as a consequence of the Proposed Acquisition. The Undertaking aims to achieve this objective by placing obligations on Metcash to:
- not restrict the ability of hardware stores that are supplied by Metcash to purchase goods from other suppliers, therefore lowering barriers to entry in hardware and home improvement wholesaling and encouraging greater choice of supply for retailers;
- not discriminate against hardware stores that are supplied by Metcash that compete with hardware stores in which Metcash holds an ownership interest, in relation to supply terms;
- provide information about Metcash’s obligations under this Undertaking to hardware stores that are supplied by Metcash; and
- provide for the effective oversight of Metcash’s compliance with this Undertaking.