The competition watchdog has raised concerns over Woolworth’s proposed takeover of PDF Food Services, claiming it could increase the listed supermarket giant’s already considerable bargaining power.
The competition watchdog has raised concerns over Woolworths' proposed takeover of PDF Food Services, claiming it could increase the listed supermarket giant's already considerable bargaining power.
Woolworths announced its intention to spend $552 million on a 65 per cent stake in the wholesale food distributor and 100 per cent of the group's 26 distribution centres in a statement to the market in August this year.
PDF Food Services provides goods to restaurants, cafes, fast food franchises, hotels and clubs.
In a statement outlining its concerns, the Australian Competition and Consumer Commission (ACCC) said the deal would remove PFD as an important alternative customer in the food sector.
It is also concerned the acquisition would reduce the number of buyers and increase Woolworths' size as a customer of food manufacturers and supplies.
"The dominance of Coles and Woolworths in food retail means that wholesale food distribution is an important alternative customer channel for manufacturers," ACCC chair Rod Sims said in a statement.
"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."
Woolworths and PFD both buy food and groceries from suppliers such as frozen food manufacturers, dairy processors and manufacturers of pasta and sauces.
Woolworths Group CEO Brad Banducci today acknowledged the ACCC's concerns.
"We have been working closely and constructively with the ACCC on these issues," Mr Banducci said in a statement to the ASX.
"We remain confident that we will address any outstanding potential concerns so that we can progress the proposed partnership.
"We see no reduction in competition, in any relevant markets, from our proposed partnership with PFD."
The ACCC is expected to make its final decision on the deal in April next year.
Source: 9News https://www.9news.com.au/national/woolworths-accc-raises-concerns-over-woolworths-proposed-takeover-of-pdf-food-services/b2dc8fb0-2ff4-463d-90c6-ac86fec1ed3e