The Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose Woolworths’ controversial investment in PFD Food Services (PFD).
The acquisition has been met with fierce opposition from those operating in the food distribution sector, and industry associations have said that the ACCC’s decision will put small businesses under threat.
The five key opposing associations, including the Australasian Association of Convenience Stores (AACS); the Australasian Convenience and Petroleum Marketers Association; COSBOA; IFDA; and the Master Grocers Association, have fiercely opposed the acquisition since it was initially proposed.
Their main areas of concern were that the acquisition will reduce choice and increase costs for Australia’s food service operators. And that it will significantly reduce distribution choice for suppliers, reducing the route to market for the tens of thousands of products that their members are responsible for.
These five associations are disappointed by today’s decision from the ACCC and say that they will closely monitor “anti-competitive behaviour from Woolworths” and continue to fight for the rights of their members.
The ACCC has spent months investigating the transaction and ultimately determined that the acquisition is “not likely to substantially lessen competition”.
But Richard Hinson, Chairman of Independent Food Distributors of Australia (IFDA), said that there are hundreds of small family-operated businesses that will be disadvantaged by the acquisition.
“While we acknowledge the ACCC’s efforts in investigating this proposed acquisition, we are incredibly disappointed by the decision to allow Woolworths to acquire PFD, one of the most significant players in the food distribution services sector.
“Given its track record in other sectors, we know that Woolworths will inevitably misuse its increased market power, and this will ultimately cost hundreds of jobs in the food distribution sectors, many of which will be in regional Australia.”
Jos de Bruin, CEO, MGA, echoes these thoughts, saying: “Every time another small business in our sector is forced to close; jobs have to be cut; suppliers have fewer distribution choices; or prices go up because of Woolworths’ strongarm tactics, we will highlight it to the ACCC and other interested parties such as local members of Parliament.
“Based on the retail giants’ previous behaviour in other industries, we know that the damage to our sector because of this acquisition will be a matter of when, not if. It is more important than ever that we continue to work together and stand up for our members as they face yet another threat to their futures through no fault of their own.”
AACS CEO Theo Foukkare, said that while he respects the ACCC’s decision, the outcome is still very disappointing for the industry.
“The five peak bodies that AACS have been aligned with have fought extremely hard to convince the ACCC against this decision. We believe it is only a matter of time that we will see Woolworths’ historical behaviours in other channels where they have destroyed small businesses come to light in the food distribution sector.
“The AACS, along with the Australasian Convenience and Petroleum Marketers Association; COSBOA; IFDA; and the Master Grocers Association will continue to fight for our members by highlighting any anti-competitive behaviour from Woolworths.
“Our members represent small business, employ thousands of people who provide for their families and this will continue to come under pressure as the effects of this acquisition come into play.
“The only area that we are somewhat happy with is the ACCC’s recognition of the ‘smokescreen’ that was proposed as undertakings as being full of holes. If the outcome is stronger future enforcement of the Grocery Code of Conduct and the introduction of penalties, then we see this as progress.”
Following the ACCC’s decision, Woolworths Group will now acquire of 65 per cent equity interest in PFD, with completion expected by the end of June.
If you have a comment on the acquisition we would love to hear from you. Please reach out to Deb Jackson on d.jackson@c-store.com.au.