Five peak bodies representing convenience stores, independent grocers and food service suppliers have urged the ACCC to oppose WOW’s purchase of a majority stake in PFD

14/05/21

AFR

Five peak bodies representing convenience stores, independent grocers and food service suppliers have urged the competition regulator to oppose Woolworths’ purchase of a majority stake in one of the nation’s largest food service players, PFD Food Services.

They have labelled the promised undertakings from Woolworths as “meaningless”.

In a joint statement, the group, which includes the Australasian Association of Convenience Stores, Council of Small Business Organisations of Australia and Independent Food Distributors Australia, said it believed Woolworths and PFD’s draft behavioural undertakings, designed to maintain a degree of separation and independence for three years after acquisition, did not address the bigger competition issues.

“Concerns are mounting within small business that the ACCC is being hoodwinked by meaningless undertakings that will be quickly rolled back by Woolworths,” the statement said.

On Wednesday the Australian Competition & Consumer Commission said it was seeking feedback on draft undertakings made by Woolworths and PFD to meet competition concerns.

Last year Woolworths announced a deal to buy a 65 per cent stake in PFD for $552m. But it caused immediate concern to food service companies and other food suppliers as Woolworths would control one of the biggest food service firms in Australia.

The peak bodies on Thursday said in a statement the main concerns already raised by the five industry bodies to the ACCC opposing Woolworths’ acquisition of PFD were that it would reduce choice and increase costs for Australia’s food service operators, would significantly reduce distribution choice for suppliers, would increase costs for suppliers, would erode the value chain for suppliers and would significantly reduce innovation in both food manufacturing and production.

“None of these concerns are addressed in any way by the undertakings Woolworths has made to date,” the statement said.

“If this does not change, the ultimate outcome of the acquisition will be higher grocery prices for consumers in the medium term. Hundreds of small businesses operating in the food distribution industry fear their livelihoods will be wiped out if the ACCC green-lights Woolworths’ controversial acquisition of PFD Food Services next month.”

Food Distributors Australia chairman Richard Hinson said it was concerning that Woolworths’ latest undertakings were subject to significant caveats.

“If the consequences of this transaction weren’t so serious, it would be laughable that Woolworths has proposed undertakings it says will preserve com­petition while in the next breath admitting they could be rolled back within three years subject to fine print,” Mr Hinson said.

A spokesman for Woolworths said its investment was for the benefit of the business and its customers. “We’ve made public commitments to our suppliers that trading terms and confidential ­information won’t be shared between PFD and Woolworths ­Supermarkets,” he said. “We stand by the integrity of those commitments and will continue to honour them.”

Woolworths said it would seek to provide further assurance to suppliers and the ACCC.