Woolies deal slammed
Takeover of PDF Food Services a ‘kick in the guts’ for independents
WOOLWORTHS should be blocked from buying a controlling stake in a major food service distributor, according to the small business ombudsman.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell has written to the competition watchdog calling for the $552m deal to be rejected.
It comes after the Australian Competition and Con
sumer Commission last month launched a review into the supermarket group’s proposed acquisition of 65 per cent of Melbourne-based PFD Food Services, inviting submissions.
Ms Carnell said Woolworths should not be allowed to pick up a large chunk of the food services market.
PFD is the nation’s biggest family-owned food service distributor, specialising in supplying groceries to other businesses, such as aged-care homes, kindergartens and restaurants.
Ms Carnell said the deal would allow Woolworths to significantly improve its competitive position relative to small supermarket competitors.
PFD could pass on information about them and Woolworths’ claims it would establish “Chinese walls” to prevent this was questionable, she said.
Ms Carnell said she was also concerned it would lead to significant job losses among smaller suppliers and distributors, which would have a battle to compete with a Woolworths-controlled PFD.
“Woolworths has described its push into the food services sector as a ‘strategic investment’, but the timing is opportunistic at best,” she said.
Following the restrictions ushered in amid the coronavirus pandemic, independent food distributors were only now starting to get back on their feet, Ms Carnell said.
“To allow this deal to go ahead would be a real kick in the guts,” she said.
PFD began in 1943 and delivers dry goods, frozen and chilled products, fresh seafood and meat, confectionery, paper products and cleaning products. Pubs, cafes, airlines, hotels, restaurants, resorts, convenience stores and fastfood outlets are also among the businesses it supplies.
Announcing the deal in August, Woolworths said it would involve the 100 per cent acquisition of PFD’s freehold properties, mainly made up of 26 distribution centres.
It said PFD would “continue to operate as a standalone business”.
The ACCC’s findings expected in December are