On a similar topic from a recent article from the AFR;
Bunnings' acquisition raises eyebrows at ACCC
Bunnings' acquisition of a family-run power tools retailer in Adelaide is under a cloud after the competition regulator launched a review into whether the deal will reduce competition.
Bunnings agreed last month to buy specialist tool and power equipment retailer Adelaide Tools from owners Marissa and Rob Peach as part of a strategy to expand its trade supplies business.
The acquisition was not expected to trigger competition concerns because Adelaide Tools, which has five retail outlets, a mower centre and an online store, sells mainly high-end power tools such as drills, orbital sanders, circular saws and air compressors.
The competition regulator is reviewing Bunnings' proposed acquisition of power tool retailer Adelaide Tools.
These products represent a small portion of Bunnings' total range of products and services.
However, the Australian Competition and Consumer Commission launched an informal review last week under Section 50 of the Competition and Consumer Act to look at the impact of the proposed acquisition on competition in South Australia and nationally.
The ACCC is seeking submissions from interested parties on how closely Bunnings and Adelaide Tools compete with each other. It wants to know which products/services they compete over, which other retailers compete in the tools, hardware and power equipment categories, and the likely impact of the acquisition on prices and service.
Submissions are due by November 21 and the ACCC expects to announce its findings – either a final decision or a statement of issues – at the end of January.
Bunnings said the acquisition was always subject to regulatory approval and the review was part of that process.
"As with any acquisition of this nature, we engaged with the ACCC to ensure they could conduct any necessary review required. We look forward to hearing the decision in due course," said Bunnings managing director Michael Schneider.
The ACCC has reviewed almost a dozen acquisitions by Bunnings over the last 15 years, including the purchase of five Mitre 10 stores in Griffith, Kempsey, Wodonga, Modbury and Randwick in 2009 and another Mitre 10 in Werribee in 2012.
In each case, the competition regulator gave the all-clear, enabling Bunnings to open stores in areas where it lacked a presence or increase its share of existing markets.
Bunnings is now estimated to account for about 16 per cent of the total home improvement market and almost 50 per cent of the DIY market, with annual sales of more than $13 billion.
It has 267 warehouses, 75 small format stores and 32 trade centres, including 14 large format warehouses, two small format stores and two trade centres in the greater Adelaide region.
Bunnings also recently launched an online store which offers click & collect and delivery in South Australia, Victoria, the ACT, Northern Territory and Tasmania, with other states expected to come online before Christmas. The ACCC review will look closely at competition between bricks and mortar and online stores.
Mr Schneider believes Bunnings is under-represented in the trade sector and has been attempting to grow share through acquisitions and by expanding its trade range, strengthening its relationships with tradesmen, boosting staff training and enhancing its PowerPass trade account.
"We see trade in the immediate short-term as having the most significant upside opportunity for us," Mr Schneider said earlier this year.