Competition watchdog sounds warning over Bunnings merger with Adelaide Tools

Bunnings’s proposed acquisition of Adelaide Tools could lead to a lack of competition in the hardware market, a preliminary statement of issues released by the Australian Competition and Consumer Commission has warned.

The statement said that while Bunnings is a major player nationwide, Adelaide Tools is one of only two tool specialists with a physical presence in Adelaide, and competes on price, innovation, range, and quality of service.

Therefore the proposed acquisition would likely stifle any local competition.

“Bunnings has a very powerful position in hardware, building supplies and home improvement. Since the exit of Woolworths’ Master from the industry, Bunnings has grown rapidly and has become by far the leading player,” ACCC chairman Rod Sims said.

“The ACCC considers that tools specialists, such as Adelaide Tools, are Bunnings’ closest and strongest competitors for the supply of trade and outdoor power equipment.”

With Bunnings already being the biggest player in the market nationwide, however, it’s unlikely the acquisition would increase its wholesale buying power.

Earlier this month the competition watchdog said it needed more time to consider the impact of the potential merger, and that the findings released on the 14th could be a statement of issues or a final decision.

The ACCC clarified it will hand down its final decision on April 23.

Bunnings managing director Mike Schneider said the business has been providing the ACCC with timely and comprehensive responses to inquiries, and is disappointed with the delay.

“We strongly believe that this acquisition does not substantially lessen competition as there is limited competitive overlap between Adelaide Tools’ specialist power tool and heavy duty machinery offering and the Bunnings’ Warehouse customer proposition,” Schneider said.

“It is also our strong belief that this merger will enhance value for customers and create stronger competition in the South Australian market.”

This article was first published on Inside Retail.

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