The ACCC has outlined preliminary competition concerns with Woolworths’ proposal to acquire 65% of PFD Food Services.
According to ACCC Chair Rod Sims, the organisation is concerned that the proposed acquisition seems “likely” to increase Woolworths’ already “substantial” bargaining power in its dealings with food manufacturers.
“The ACCC is concerned that the proposed acquisition would remove PFD as an important alternative customer in the food sector, reducing the number of buyers and increasing Woolworths’ relative size as a customer of food manufacturers and suppliers,” he says.
“The dominance of Coles and Woolworths in food retail means that wholesale food distribution is an important alternative customer channel for manufacturers.”
The ACCC is also considering whether the proposed acquisition could affect downstream competition.
“If Woolworths was able to use its existing bargaining power as a retail buyer 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,” says Mr Sims.
In addition, the ACCC is continuing to consider other issues. This includes whether Woolworths acquiring a company which supplies its competitors will lead to risks of foreclosure, and the extent to which Woolworths at Work and AGW compete with PFD at the moment or are likely to compete with PFD in future.
Feedback on the ACCC’s statement of issues is due by 1 February 2021.
