ACCC clears Bunnings’ acquisition of Beaumont Tiles

• The ACCC will not challenge Bunnings’ proposed acquisition of specialised tile supplier Beaumont Tiles
• Wesfarmers (WES)-owned Bunnings entered into an agreement to acquire Australian hard surfaces retailer Beaumont Tiles in April
• ACCC chair Rod Sims said the commission’s investigation found that Bunnings is not a strong competitor in tile sales
• The ACCC said the acquisition is unlikely to lead to a substantial lessening of competition in this market

The ACCC will not challenge Bunnings’ proposed acquisition of specialised tile supplier Beaumont Tiles because the transaction is unlikely to significantly reduce competition.

Wesfarmers (WES)-owned Bunnings entered into an agreement to acquire Australian hard surfaces retailer Beaumont Tiles in April, pending regulatory approval.

ACCC chair Rod Sims said at first glance the takeover appeared concerning, but that the commission’s 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,” he 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.”

The ACCC’s investigation found that speciality tile merchants compete considerably more closely with one another than with Bunnings in this case.

Specialists, according to the ACCC, offer more range, product advice, referrals and have stronger relationships with builders than Bunnings, which it said sells small volumes of tiles primarily to DIY customers.

The ACCC received some concerns, mainly from competing tile retailers, that a merged Bunnings-Beaumont Tiles would emerge to dominate the tiling retailing market.

These concerns include, for example, the possibility that the merged business may prohibit or impede rivals from quickly obtaining tiles on equivalent terms, or from conveniently servicing a large number of consumers.

The ACCC determined that these concerns were unlikely to be realised due to the availability of several alternative tile manufacturers and suppliers across the world, as well as a varied consumer 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.”