Five peak industry bodies that banded together to oppose Woolworths’ potential acquisition of PFD Food Services have warned the ACCC to maintain a focus on the grocery group’s “track record of anti-competitive behaviour”.
The group partnered in February to block the acquisition, stating it would grant the company inordinate influence over the food sector in Australia.
The anti-competitive behaviour, such as pricing out competitors and utilising private label goods to undercut brands Woolies itself stocks, has been seen across a number of industries including hardware, petrol and liquor, and has been indulged in by other retail giants beyond Woolworths, according to Richard Hinson, chairman of Independent Food Distributors Australia.
“If the consequences of this transaction weren’t so series, it would be laughable that Woolworths has proposed undertaking it says will preserve competition while in the next breath admitting they could be rolled back within three years subject to fine print,” Hinson said.
“ACCC chair Rod Sims has already admitted that behavioural undertakings can’t be policed on a daily basis. The reality of this has been demonstrated over and over again.”
And, according to the combined group, the proposed undertakings put forward by Woolworths earlier this week did nothing to address the concerns they had already put forward: That the acquisition will reduce choice and increase costs for food service operators; reduce distribution choice for suppliers; increase costs for suppliers; erode the value chain for suppliers; and, it will significantly reduce innovation in the space.
“Both sets of Woolworths’ undertakings do absolutely nothing to reduce their significant market power in Australia and should be viewed for what exactly they are: a smokescreen to try and divert attention away from the five key concerns we have raised which remain unaddressed,” said Australasian Association of Convenience Stores chief executive Theo Foukkare.
COSBOA chief executive Peter Strong said it is increasingly important that the ACCC understands the consequences of getting this decision wrong.
“Our members, particularly those in regional Australia, have already been hard hit by the Covid-19 pandemic and, if allowed, this transaction will destroy many small businesses and cost thousands of jobs within our $11 billion industry.”
MGA chief executive Jos de Bruin said this was an example Woolworths using its “deep pockets” on a “creeping acquisition” which it will use to further dominate the food and grocery market and lessen competition.
“MGA’s members have long advocated that Woolworths domination of Australia’s grocery, food distribution and liquor markets is already so strong that the Woolworths Group ought to be considered for divesture to rekindle consumer choice,” de Bruin said.
A Woolworths spokesperson confirmed to Inside Retail that it is seeking to invest in PFD alongside the Smith family for the benefit of the business and its customers, and stands by the integrity of the commitments it has made.
“After extensive analysis and engagement with the ACCC, we see no substantive competition concerns arising from an interest in PFD,” the Woolworths spokesperson said.
“We’ve made public commitments to our suppliers that trading terms and confidential information won’t be shared between PFD and Woolworths Supermarkets. Additionally, we have, in good faith, offered the enforceable undertaking to reiterate our public commitments and provide further assurance to suppliers and the ACCC ahead of its decision.
“A specific timeframe is required in the undertaking because it’s a legal document, however, our broader public commitments to suppliers are not time-bound and will endure.”