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Gay abandon by ACCC

The Australian Competition and Consumer Commission (ACCC) will block retail giant Woolworths from acquiring a chain of three hardware stores in the Victorian town of Ballarat because it would reduce competition in the local market. Source: The Australian

Woolworths has secured a site at nearby Wendouree for a big-box outlet of its Masters home improvement chain, planned to open next year, but also planned to buy three local hardware stores owned by G Gay & Co.

The Gay stores are privately owned but the stores are members of the Home Timber and Hardware banner, which is an advertising group controlled by Woolworths’ hardware wholesale division Danks.

The ACCC said the deal would remove businesses that would have been one of Woolworths’ closest competitors in the Ballarat area; the other being the Wesfarmers owned Bunnings.

“The ACCC is concerned about the removal of a key independent competitor from the market to the detriment of competition and local consumers,” ACCC chairman Rod Sims said.

“The ACCC’s investigation indicated that the remaining suppliers of hardware and home improvement products in the Ballarat area were either significantly smaller than the G. Gay & Co stores or had a limited product offering and marketing presence, such that they would be unlikely to compete effectively against the Woolworths’ Masters store and Bunnings.”

Woolworths opened its first Masters outlet in Melbourne last year, and now has 20 stores, with plans for another 30 to open this financial year.

The company has partnered with US hardware giant Lowe’s, which has a one-third stake in the Masters joint venture, and has forecast annual sales of $6 billion by 2017.

Bunnings has ramped up its own store-opening schedule and Metcash, owner of the Mitre 10 banner, is coinvesting with independent hardware store owners looking to expand.

A Woolworth’s spokeswoman said the company was pleased the ACCC “has finally made an announcement after eight months of consideration”.

The ACCC is taking a strong stand on so-called “creeping acquisitions” by Coles and Woolworths, this year knocking back Woolworths’s planned acquisition of three pubs in NSW.