Australia's competition regulator has given the green light to Wesfarmers' takeover of Pacific Brands workwear division.

The deal to divest the unit, which includes the Hard Yakka, King Gee and Stubbies brands, was announced in August and comes as Pacific announces plans to split and sell off its loss-making Brand Collective apparel and footwear business for AUD39m (US$34m).

Wesfarmers currently competes with Pacific Brands as it is a supplier of industrial workwear through its Industrial and Safety division, and through retailers such as Kmart and Bunnings.

However, the Australian Competition and Consumer Commission's (ACCC) highlighted the reduced pull of the Hard Yakka and King Gee brands as being a key factor in its decision making.

"Industry feedback suggests that brand loyalty has diminished over recent years as customers become more focused on quality, price and service," said ACCC chairman Rod Sims.

The ACCC said the proposed acquisition was unlikely to provide Wesfarmers with the incentive to limit access by resellers and retailers to The Workwear Group brands, due to decrease in brand loyalty and the availability of competing products.

The ACCC also pointed to increased competition in the workwear sector.

"Wesfarmers will continue to be constrained by a number of existing suppliers and by actual and potential imports from Asia," Sims added. "In retail markets, Wesfarmers will face competition from other retail chains and local outlets for the supply of workwear. New wholesalers and resellers have entered the market in recent years and the ACCC expects that this trend will continue."

Wesfarmers managing director Richard Goyder welcomed the decision by the ACCC.

"Finalisation of this review has cleared the way for the completion of the transaction which is expected at the beginning of next month."

Click on the following link for further insight on the company's divestment plans: Pacific Brands review may drive further divestments.