One of the country’s best-loved ice cream brands has been slapped with a massive fine, with one move sparking “costly consequences”.
The ice cream juggernaut behind some of Australia’s favourite sweet treats has been handed a multimillion-dollar penalty for “anti-competitive exclusive dealing”.
Peters – an iconic brand founded in 1907 that produces servo classics such as Maxibon, Connoisseur, Drumstick and Frosty Fruits – has been ordered by the Federal Court to pay a $12 million fine over the distribution of ice creams sold in petrol stations and convenience stores.
The fine was issued after proceedings were brought by the Australian Competition and Consumer Commission (ACCC), with the company admitting that from November 2014 to December 2019, it acquired distribution services from PFD Food Services on the condition that PFD would not sell or distribute competitors’ single serve ice cream products in various areas without the prior written consent of Peters.
In doing so, Peters admitted it had engaged in exclusive dealing conduct that had the likely effect of substantially lessening competition in the market for the supply by manufacturers of single serve ice cream and frozen confectionary products.
Peters is one of two major manufacturers of single serve ice cream products sold in Australian petrol stations and convenience stores, while PFD is the country’s biggest distributor of single serve ice creams and is able to reach more than 90 per cent of Australian postcodes.
ACCC Chair Gina Cass-Gottlieb said it was an “important competition law case involving products enjoyed by many Australians”.
“We took this action because we were concerned that Peters Ice Cream’s conduct could reduce competition in this market and impact on the choice of single serve ice creams available to consumers,” she said.
“Peters Ice Cream admitted, that if PFD had not been restricted from distributing other manufacturers’ ice cream products, it was likely that one or more potential competitors would have entered or expanded in this market.”
PFD had been asked by ice cream manufacturers to distribute new single serve ice cream products to some Australian petrol and convenience retailers but declined, stating the firm could not due to its exclusivity arrangement with Peters.
“This case is a reminder to all businesses of the serious and costly consequences of engaging in anti-competitive conduct,” Ms Cass-Gottlieb said.
“The ACCC is targeting exclusive arrangements by firms with market power that impact competition as one of our compliance and enforcement priorities for 2022/23.”
A spokeswomean for Australasian Food Group (trading as Peters Ice Cream) told news.com.au in a statement the company was “pleased to resolve this matter, particularly given that the relevant agreement lapsed some years ago”.
“The proceedings do not relate to AFG’s current business operations, product offering or customer service in any way – the finding is purely retrospective,” the spokeswoman said.
The arrangement between Peters and PFD spanned most of the country, including Tasmania, South Australia and Western Australia, as well as the ACT, PFD’s Darwin distribution zone, and regional areas in New South Wales, Victoria and Queensland.
In addition to the $12 million penalty, Peters will also be required to establish a compliance program for a period of three years and pay a contribution to the ACCC’s legal costs.
The ice cream giant acknowledged it had breached the Competition and Consumer Act and made joint submissions with the ACCC in respect of penalties and orders.
Extracted from News.com.au