November 12, 2009The
Australian Competition and Consumer Commission (ACCC) will not oppose the proposed acquisition of Danks Holdings by Woolworths and its joint venture partner, Lowe's, after accepting court enforceable undertakings from both parties.
Woolworths and Lowe's plan to develop a network of company-owned 'big box' home improvement stores as part of the joint venture’s entry into the hardware sector, in competition with other retailers such as Bunnings.
As an aspect of this plan, the joint venture proposes to acquire Danks, a wholesale distributor of hardware products and related services to independent retailers, including those trading under the Home Hardware and Thrifty-Link banners.
However, this acquisition became the subject of an ACCC review, following concerns about the effect of the proposed acquisition on competition between hardware retailers.
In particular, the ACCC was concerned the joint venture could discriminate against some of its wholesale customers, namely hardware retailers supplied by Danks, who would also be its retail competitors.
As a result, ACCC Chairman Graeme Samuel says the Commission has accepted court enforceable undertakings from the joint venture in order to address these concerns.
"With these undertakings in place the ACCC considers the proposed acquisition unlikely to result in a substantial lessening of competition," Samuel says.
"The undertakings importantly impose requirements that will lower barriers that independent hardware stores supplied by Danks otherwise faced in switching to alternative suppliers,” he says.
Additionally, the joint venture has accepted obligations alleviating concerns that Danks stores in close proximity to joint venture big box stores would be treated less favourably than other Danks stores.
The ACCC is yet to issue a Public Competition Assessment explaining the reasons for its decision.