The Australian Competition and Consumer Commission is concerned that Woolworths’ acquisition of PFD Food Services will reduce competition in the food distribution sector, according to its preliminary concerns released today.
The proposed $552 million takeover, which would give Woolworths control of 65 per cent of PFD as well as 26 distribution centres, could reduce the number of buyers in the sector and increase Woolies’ size as a customer according to ACCC chair Rod Sims.
“The dominance of Coles and Woolworths in food retail means that wholesale food distribution is an important alternative customer channel for manufacturers,” Sims said.
“If Woolworths was able to use its existing bargaining power as a retail byer to gain better supply prices for PFD than PFD could obtain on its own, in the medium term this could have serious consequences for the structure of the wholesale food distribution sector, such as reduced range, choice and service levels.”
The ACCC is also concerned what it would look like for PFD to continue supplying Woolworths’ competitors, and if could lead to an increased risk of foreclosure.
A Woolworths spokesperson has previously told Inside Retail that the purchase will not reduce customer choice, and that the businesses will continue to run independently of one another.
“We have no presence in food service right now, and believe our investment will not only help PFD grow its business, but also add to competition and lift service levels across the industry,” the spokesperson said.
The ACCC isn’t the only body concerned about the deal, with Independent Food Distributors Australia beginning a coordinated campaign against the supermarket.
The ACCC is accepting feedback on its statement of issues by February 1, 2021, and will hand down a final decision on April 22.