ACCC clears Woolies’ path into food services via stake in PFD

THE competition watchdog has backflipped on past concerns and cleared Woolworths’ $550m acquisition of 65 per cent of food services supplier PFD.

The Australian Competition and Consumer Commission had earlier raised potential problems with Woolworths taking a big slice of one of the nation’s largest food service providers.

But on Thursday ACCC chairman Rod Sims said that after detailed analysis “the evidence before us did not indicate the transaction would be likely to substantially lessen competition”.

Woolworths welcomed the decision, which followed nine months of ACCC investigations. At the end of the day the regulator couldn’t get the evidence to back its past concerns.

Mr Sims said many of PFD’s competitors had expressed strong concerns about the Woolworths deal, in particular over the potential for

Woolworths to aggressively expand in food distribution and to leverage its buyer power in supermarkets into food distribution.

“The ACCC acknowledges that the acquisition will likely lead to changes in the way the wholesale food distribution industry operates,” Mr Sims said.

“Despite these potential changes, we concluded that there are several competitors in the wholesale segment with similar market share to PFD and non-price aspects of competition, such as range, quality and service levels, are likely to remain an important part of the competitive dynamics. Consequently there is not likely to be a substantial lessening of competition.”

PFD has just 2 per cent of the food market and Woolworths an average of 32.5 per cent – ranging from 25 to 40 per cent depending on the category.

The acquisition gives Woolworths a strong market position in the food services market.