Metcash has emerged as the front runner to buy Woolworths' Home Timber & Hardware business after securing competition clearance but has been put on notice to do the right thing by independent retailers or risk losing sales.

The Australian Competition and Consumer Commission has cleared the way for Metcash to bid for Home Timber & Hardware and merge it with Mitre 10, creating a $2.2 billion monopoly hardware wholesaler capable of better competing against market leader Bunnings.