The ACCC will not oppose the proposed acquisition of specialist tile retailer Beaumont Tiles by Bunnings, finding that the transaction is not likely to substantially lessen competition.
“At first glance, Bunnings taking over a major tile retailer appears concerning, but our investigation found that Bunnings is not a strong competitor in tile sales. This is not a case of a close competitor buying up its rival,” ACCC Chair Rod Sims said.
“However, the ACCC’s decision not to oppose this deal is based on the specific circumstances and should not be read as any indication that the ACCC will reach the same conclusion in relation to future possible acquisitions by Bunnings.”
“The way in which Bunnings is competitively constrained by specialised retailers, and the potential impact on customers and manufacturers, varies depending on the product and market circumstances. Any future expansion by Bunnings into more specialist retailing categories through acquisition of existing competitors will be very carefully considered by the ACCC,” Mr Sims said.
In this case the ACCC found that specialist tile retailers compete much more closely with each other than with Bunnings.
“Specialist tile retailers have a far more extensive range, displayed in dedicated tile showrooms with specialist staff who can provide design and product advice to customers and referrals to tilers. Specialists also have stronger relationships with larger builders, and usually deliver tiles direct to work sites,” Mr Sims said.
“By contrast, Bunnings generally sells small volumes of tiles in-store to Do-It-Yourself customers, and tilers and other trades people undertaking small jobs.”
Market participants who spoke to the ACCC highlighted Bunnings’ lack of services offered by specialist retailers such as product or design advice as a particular reason Bunnings is not a strong competitor to specialist tile retailers.
“Following the acquisition, several large and small specialist retailers will remain to compete with Bunnings in every state and territory.”
The ACCC heard some concerns, primarily from other tile retailers, that a combined Bunnings-Beaumont Tiles would come to dominate tiling retailing.
These concerns include, for example, that the combined firm could prevent or hinder rivals from easily accessing tiles on comparable terms, or from easily serving a significant body of customers.
The ACCC undertook extensive inquiries with customers, local and overseas tile suppliers and competitors, and examined financial information and company documents to inform its assessment.
Ultimately, the ACCC found that these concerns were not likely to eventuate because of the availability of many alternative manufacturers and suppliers of tiles globally, and a diverse customer base for tiles in Australia.
“There is little doubt that the proposed acquisition will allow Bunnings to compete strongly with specialist tile retailers, particularly in supplying larger builders who Bunnings has struggled to attract to date,” Mr Sims said.
“Stronger competition may pose challenges for some tile retailers, but it is unlikely to lead to a substantial lessening of competition in this market.”
More information is available at: Bunnings Group Limited – R J Beaumont & Co Pty Limited
Background
Beaumont Tiles is a national specialist tile retailer and franchise operator. It has over 110 retail locations in Australia supplying tiles, tiling ancillaries (including glues, grouts, sealers, cleaners, adhesives, floor trimming, tools and underlay) and bathroomware.
Beaumont Tiles operates through a mixture of corporate-owned and franchised retail locations, generally trading under the Beaumont Tiles brand.
Bunnings is a national multi-category home improvement and outdoor living retailer. Bunnings operates over 300 retail stores in Australia, most of them as large format warehouses.
Note:
In considering the proposed acquisition, the ACCC applies the legal test set out in section 50 of the Competition and Consumer Act. In general terms, section 50 prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in any market.
