Woolies offers temporary obligations to sweeten prospective PFD purchase

Woolworths Group has responded to the ACCC’s concerns surrounding its proposed buy-up of food distributor PFD Food Services, offering up self-imposed obligations in order to ensure competition in the space isn’t eroded.

According to the food group’s undertaking offer, Woolworths is willing to ensure that, throughout its partnership with PFD, the two businesses will not share trading terms, will retain and manage their own trading terms with suppliers, and will not disclose any information to the other in terms of dealings with “certain customers” – in other words, competitors to Woolworths.

According to the ACCC, these would be temporary measures, in effect for five years from the acquisition date, designed to “allow the market to adjust to Woolworths and PFD ceasing to be independent of each other”.

The move is made to assuage industry fears that the combined group would be able to dominate the food supply industry, as has been voiced by a collection of five food service and retail industry organisations.

And while the ACCC has asked for industry and stakeholders feedback on Woolworths’ updated terms, the details of this undertaking were known in early March and have already seen pushback.

“Woolworths’ latest undertakings to the ACCC to keep supplier and customer information confidential, as part of its bid to acquire PFD Foods, are yet another smokescreen to steamroll both small business and the ACCC,” COSBOA chief executive Peter Strong said in March. “We remain extremely concerned about the inevitable negative impact of this proposed merger on businesses in the food supply chain, from growers, to manufacturers, distributors, food service retailers and independent grocers and, ultimately, Australian consumers.”

The group partnered in February to block the acquisition, stating it would grant the company inordinate influence over the food sector in Australia.

Woolworths has previously said it is confident it can address the concerns of industry parties and will ultimately receive a green light from the ACCC.

“We provided the draft undertaking to the ACCC in mid March and are pleased they’re now consulting stakeholders and industry on the matter,” a Woolworths spokesperson said.

“Critical to the success of our proposed partnership with PFD is maintaining long-term, collaborative and sustainable supplier and customer relationships. The undertaking provides further assurance to our previous public commitments to keeping supplier and customer information confidential.

“We continue to submit to the ACCC that the proposed partnership will give rise to no substantive competition concerns irrespective of the undertaking we have offered.”

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