ACCC says it will not stand in the way of Woolworths' bid to enter the hardware market
November 12, 2009
Bunnings dominance over the hardware market is about to be tested after the competition regulator decided against stopping Woolworths from entering the sector.
The Australian Competition and Consumer Commission says it will not oppose Woolworths’ proposed takeover of Danks Holdings as part of a joint venture with Lowe’s, a United States home improvement retailer.
Under the plan, a network of home improvement stores will be established in a move Woolworths says will increase consumer choice and give customers a better deal.
The ACCC made the decision after gaining court enforceable undertakings regarding the purchase of Danks, which is the distributor for Home Hardware and Thrifty Link.
The ACCC was concerned the acquisition might harm the two retailers because they would be receiving goods from a company in competition with them.
However, the ACCC says the undertakings will ensure there will not be a decline in competition.
“The undertakings importantly impose requirements that will lower barriers that independent hardware stores supplied by Danks otherwise faced in switching to alternative suppliers,” ACCC Chairman Graeme Samuel says.
The ACCC it has also received an obligation that stores close to those run by Woolworths will not be treated less favourably.
The supermarket giant welcomed the ACCC’s decision and says it now clears the way for the acquisition to happen.
“At the time that the Danks offer was announced, Woolworths commented that the combination of industry expertise on the Danks side combined with Woolworths’ access to capital and supply chain systems would significantly benefit the independent retailers and their offer,” a statement from the company says.
Woolworths announced its intention in August to buy Danks for $87.6 million.
Wesfarmers, which owns Coles, runs the popular Bunnings stores.