The ACCC is not opposing the proposed acquisition of OfficeMax Australia by US company Platinum Equity, clearing the way for it to bid against privately owned Complete Office Supplies (COS) for ownership of Officemax.
Earlier this month COS received the green light from the ACCC to buy OfficeMax. The two companies are now expected to compete to own the business.
Platinum Equity already owns Winc (formerly Staples, which it bought in March this year), a company which like OfficeMax supplies office products to commercial and government customers in Australia, and which has retail printing as part of its store offering.
Rod Sims, chairman for the ACCC says, “Following extensive market inquiries and analysis of documents and data, the ACCC has decided not to oppose this transaction. The ACCC believes the transaction will lessen competition but doesn’t reach the threshold of causing a substantial lessening of competition.
“Any deal that sees the largest supplier acquiring the second largest in a market will require close scrutiny. However, in a finely balanced decision the ACCC found that a combined Winc-OfficeMax would continue to face competition from the remaining key suppliers, Complete Office Supplies (COS) and Lyreco.”
[Related: ACCC allows OfficeMax acquisition]
Officemax is a wholly owned subsidiary of US company Office Depot, it has 11 stores across Australia, offering stationery supplies along with print and print management in each location. Winc is the larger force with 32 stores across Australia and New Zealand, each with a print department.
Sims says, “Many large commercial and government customers put their contracts out to tender, and both COS and Lyreco have recently been successful in winning customers from Winc and OfficeMax. As a result, the ACCC considers that COS and Lyreco, combined with the ability of large customers to switch suppliers and to purchase products off-contract, are likely to provide a sufficient competitive constraint on the combined Winc-OfficeMax.
“The ACCC would also expect that if prices and returns increased through an exercise of market power by a combined Winc-OfficeMax, it is likely that other existing suppliers of office products would seek to grow their market share.”
Both Winc and OfficeMax sell office supplies, but the ACCC has a focus on the supply of products to large commercial and government customers.
Sims says, “The ACCC contacted many large commercial and government customers. While some were concerned about the transaction, there were also many that didn’t engage with the ACCC. Where we are considering a horizontal merger such as this, we rely heavily on the views of customers.”
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