All those concerns were submitted to the Australian Competition and Consumer Commission by the Australian Small Business and Family Enterprise Ombudsman Kate Carnell.
The ACCC is currently considering the Woolworths Group Limited’s $522 million plan to secure a controlling interest (65 per cent) in PFD Food Services.
PFD Food Services is Australia’s largest privately owned foodservice network and the largest family owned company in the nation.
The hospitality sector, tourism sector and fast food outlets are PFD’s main customers, ordering everything from premium meat and seafood to takeaway cups.
Ms Carnell wrote to the ACCC to formally oppose the merger, saying the deal was detrimental to small businesses in the food distribution space and the economy.
“The ACCC should also consider the impact this deal could have on manufacturers and farmers,” Ms Carnell said.
“The last thing they need right now is a dominant market player putting price pressure on suppliers.
“Allowing Woolworths to buy PFD would significantly improve its competitive position against other smaller supermarket operators.”
Ms Carnell said the merger would dramatically impact the food distribution market, threatening small and family businesses, especially outside the major cities.
“I am also concerned about significant job losses as smaller suppliers and distributors would have a battle on their hands to compete,” she said.
“Claims by Woolworths about plans to establish Chinese walls to prevent PFD passing on information about small supermarket competitors is questionable.”
‘Chinese walls’ is a business term for an information barrier built within a company to prevent a conflict of interest.
The Independent Food Distributors Australia estimated Woolworths — a company responsible for a third of all supermarket sales — would pick up a large chunk of the foodservice market as a result of this deal.
Woolworths Group chief executive officer Brad Banducci said in August the acquisition was a "logical adjacency".
“The investment will also unlock synergies for both businesses across the combined network and fleet,” he said.“We will help to support PFD’s growth through access to our logistics, digital and data analytics and operational capabilities.“For Woolworths Group, it will enhance store range localisation and provide fleet synergies through better route and capacity optimisation across our combined network.”
The ACCC review of the merger commenced in September and is expected to deliver a decision by the end of 2020.
