Wesfarmers' acquisition of Catch Group gets green light from ACCC

Written on the 5 August 2019 by Matt Ogg

Wesfarmers' acquisition of Catch Group gets green light from ACCC

The national competition regulator sees no problem with Wesfarmers' (ASX: WES) proposed $230 million acquisition of online retailer Catch Group and will not oppose the deal.

The Australian Competition and Consumer Commission (ACCC) determined a link-up of Wesfarmers' Kmart and Target stores with the e-commerce player would not have a relevant impact on retail competition. 

"We reviewed whether Wesfarmers' retail position could be leveraged into online sales and marketplaces in an anti-competitive way," says ACCC Commissioner Stephen Ridgeway.

"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."

The stores' online and offline offerings range from clothing and general merchandise to homewares and electronics, with Catch selling out-of-season, clearance or overrun branded products in addition to its online marketplace for third-party sellers.

The ACCC also concluded there wouldn't be any impact on third-party sellers through the acquisition.

"Stakeholders also consistently told us that Catch and Wesfarmers are not close competitors, primarily due to the differences in their business models," says Ridgeway.

In response, Wesfarmers said it expected the transaction to be completed this month, subject to the satisfaction of remaining obligations.

Apart from its e-commerce business, Catch also has businesses in personal loans, mobile phone plans and an online shopping club. The company has experienced significant growth in recent years offering branded products, supported by two fulfilment centres in Victoria.

When Wesfarmers announced its takeover intentions in June, managing director Rob Scott said the acquisition would help build data and digital capabilities while providing investment in opportunities adjacent to its existing businesses.

"Catch Group has a high calibre management team and a leading e-commerce platform with quality fulfilment assets," Scott said.

"This acquisition represents an opportunity to accelerate Wesfarmers and Kmart Group's digital and e-commerce capabilities whilst continuing to invest in the unique customer and supplier proposition provided by Catch Group."

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Author: Matt Ogg

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