Woolworths' distribution bid "opportunistic": Ombudsman - Inside FMCG

Woolworths’ distribution bid “opportunistic”: Ombudsman

Woolworth’s bid to acquire food distributor PFD has earned another detractor, with the Australian Small Business and Family Enterprise Ombudsman Kate Carnell officially opposing the move.

The Ombudsman has written to the ACCC to urge the regulator to block the acquisition on the grounds that it could be disasterous for small businesses in the food distribution space.

“Woolworths has described its push into the food services sector as a ‘strategic investment’, but the timing is opportunistic at best,” Carnell wrote.

“Now that Woolworths has exhausted opportunities in the large supermarket space, it is moving into the smaller supermarket arena. Allowing Woolworths to buy PFD would significantly improve its competitive position against other smaller supermarket operators.

“Small food distributors are only now starting to get back on their feet after months of heavily restricted trade due to the forced closure of pubs, clubs and other commercial venues. To allow this deal to go ahead would be a real kick in the guts.”

Additionally, the Ombudsman said she is concerned about job losses in smaller operators if they are unable to compete.

The ACCC said in September it would be formally reviewing the acquisition bid, in which Woolworths hopes to buy up 65 per cent of PFD.

The commission will be considering potential detriment to marketplace competition by allowing the businesses to effectively merge and operate together rather than as competitors.

The deal has seen significant resistance from industry players, with a number of distributors uniting to form the National Association of Food Distributors mainly in an effort to stop the deal from taking place.

However, a Woolworths spokesperson previously told Inside Retail the food distribution sector is highly fragmented and that its investment in PFD wont reduce customer choice. “We have no presence in food service right now, and believe our investment will not only help PFD grow its business, but also add to competition and lift service levels across the industry,” the spokesperson said.

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