Consumer commission finds no threat to change in competition playing field from businesses operating in different marketplaces
The sale of Catch Group to Wesfarmers has been given the greenlight by the Australian Competition and Consumer Commission (ACCC) following an anti-competition review.
The industry watchdog announced its review of the proposed acquisition, first announced in June, to consider both bricks-and-mortar and online retail competition, and whether there would be any potential impact on third-party sellers in that retail space.
“The current growth in online marketplaces is fostering competition between providers, and feedback indicated that Wesfarmers’ proposed acquisition of Catch would be unlikely to change that level of competition,” ACCC commissioner, Stephen Ridgeway, said in a statement.
ACCC found Catch is an online retailer selling off-season, clearance or overrun branded products and operates an online marketplace, while Kmart and Target are predominately bricks and mortar stores.
“Stakeholders also consistently told us that Catch and Wesfarmers are not close competitors, primarily due to the differences in their business models,” Ridgeway said.
According to the ACCC, the proposed acquisition will not reduce online marketplace options for third-party sellers as Wesfarmers will be a new entrant and Wesfarmers-Catch will compete with other online marketplaces. Further, the ACCC found there has been significant growth and new entries into online marketplaces over the past few years in Australia, including by Kogan and Amazon.
The $230 million acquisition was announced in June and is to be funded from existing debt facilities. It is not expected to affect Wesfarmers’ existing credit ratings. Wesfarmers also owns retail brands including Kmart, Target, Bunnings and Officeworks, as well as host of industrial brands.
In a statement at the time the acquisition was announced, Westfarmers described Catch Group as an established, profitable and cash-generative business that operates an online business model offering branded products on a first-party basis and a third-party online marketplace. Catch Group will operate as an independent business unit, under the oversight of Ian Bailey, the managing director of Kmart Group.
Wesfarmers managing director, Rob Scott, said previously the acquisition is consistent with the group's disciplined approach to capital allocation, including investment in opportunities adjacent to its existing businesses.
“This acquisition represents an opportunity to accelerate Wesfarmers and Kmart’s digital and ecommerce capabilities while continuing to invest in the unique customer and supplier proposition provided by Catch Group.”
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