The Australian Competition and Consumer Commission says the proposed acquisition would not substantially reduce competition in either consumer electronics or white goods retailing, with Harvey Norman and Bing Lee among a raft of other companies in the markets.
“JB Hi-Fi has traditionally focused on selling consumer electronics, with stores located mostly in shopping centres or CBDs. On the other hand, The Good Guys has mostly focussed on white goods and other home appliances, with stores generally located in home centres or similar locations,” said Rod Sims, ACCC chair.
“Other retailers, such as Harvey Norman, have a much higher degree of overlap with The Good Guys than JB Hi-Fi.”
Sims said JB Hi-Fi and The Good Guys were clearly in competition with each other to a degree.
“The ACCC focussed its investigation on high-value consumer electronics and home appliances, particularly televisions, where there is the greatest overlap between the Good Guys and JB Hi-Fi.”
JB Hi-Fi has also recently opened a number of JB Hi-Fi Home stores which stock a wider range of home appliances, competing more directly with the Good Guys. Sims said the ACCC considered the potential for the JB Hi-Fi Home Stores to become a larger player in non-electronics in the future.
“On balance, the ACCC did not consider that the acquisition would substantially lessen competition in any market,” he said. “We considered that the combined company would continue to face strong competition from Harvey Norman and other existing retailers such as Betta, Retravision, Bing Lee and Radio Rentals,” Sims said.
“For lower value and smaller items, we considered that consumers have a range of alternatives, including online suppliers and discount department stores.”
Richard Murray, JB Hi-Fi CEO, said the retailer is continuing to participate in the sale process but have not yet made any decision or entered into any agreement regarding an acquisition of The Good Guys.
“JB Hi-Fi understands that The Good Guys are looking at a range of options including an IPO on the ASX,” Murray said.
Murray said JB Hi-Fi is evaluating all possibilities against a range of factors and would only pursue an acquisition if it made compelling financial sense for its shareholders.
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.