The Australian Competition and Consumer Commission will not oppose a bid from Metcash to acquire rival hardware wholesaler Home Timber & Hardware from Woolworths after accepting a court-enforceable undertaking from Metcash.
In response to ACCC concerns, Metcash proposed an undertaking stipulating it would not restrict independent hardware stores from acquiring products from non-Metcash sources, nor would it favour its own hardware stores over nearby independent stores.
The ACCC has accepted this undertaking as a condition for allowing the bid to proceed.
“The decision not to oppose this bid was finely balanced and one the ACCC has given deep consideration to,” ACCC Chairman Rod Sims said.
“We looked at the competition issues surrounding Metcash acquiring its only rival full-service wholesaler. We received significant feedback from independent retailers. The majority were supportive of the bid, but we also took on board feedback from others who expressed some concerns.
“Bunnings is a large, powerful retailer that is present in most local markets, which will indirectly constrain Metcash’s wholesale operations – a factor we also took into consideration.
“We decided to accept Metcash’s undertaking, which should provide independent retailers with the ability to bypass Metcash by using buying groups or negotiating directly with manufacturers. This should also facilitate entry by any new wholesaler that may emerge.”
An independent auditor, who will report to the ACCC, will ensure Metcash is meeting its obligations outlined in the undertaking. Metcash will also be required to give retailers plain-English information on its obligations. Retailers can contact the ACCC if they have concerns about Metcash’s compliance with the undertaking.
Retailers trading under the Home Timber & Hardware, Thrifty-Link, True Value Hardware or Mitre 10 banners can decide to leave those brands and establish themselves as unbannered, independent retailers. The undertaking prevents Metcash from ‘locking out’ existing or new wholesalers from supplying those retailers.