Peters prevented food distributor from engaging with other ice cream makers, ACCC alleges

Key points:

  • The ACCC alleges Peters rejected PFD’s request to distribute competing ice creams to stores
  • PFD was the only company capable of distributing single-serve ice creams on a commercially viable basis
  • The ACCC alleges the agreement was exclusive dealing and hindered competition

One of Australia’s largest ice cream suppliers has been accused of depriving consumers of choice and cheaper prices by hindering competition within the market.

The Australian Competition and Consumer Commission (ACCC) has accused the Australasian Food Group, which trades as Peters Ice Cream, of engaging in anti-competitive dealings that stopped other companies from selling ice cream at convenience stores and petrol stations.

Peters makes ice creams such as the Drumstick, Maxibon, Connoisseur, Frosty Fruits and Billabong.

The competition watchdog has launched Federal Court action against Peters, alleging between 2014 and 2019 Peters engaged in exclusive dealing by entering into an agreement with food delivery company PFD Food Services to distribute its single-wrapped ice creams across the country.

Exclusive dealing occurs when one person trading with another imposes restrictions on the other’s freedom to choose with whom, what, or where they deal. It is against the law only when it reduces competition.

ACCC chair Rod Sims said the commission would argue “Peters’ conduct effectively raised barriers of entry, which hindered or prevented potential new entry into the market to supply single-serve ice cream products to petrol and convenience retailers”.

According to the ACCC, the agreement contained a condition that PFD could not distribute any competing ice cream products in certain locations around Australia.

Peters allegedly rejected requests by PFD to distribute other ice cream products to petrol stations and convenience stores.

The ACCC alleges that, for new ice cream and frozen dessert entrants, PFD was the only distributor capable of distributing single-serve ice creams to national petrol and convenience retailers on a commercially viable basis.

Unlike PFD, other potential distributors did not have a national frozen food route to these retailers.

A spokesperson from Peters said the company intended “to vigorously defend any proceedings”.

“AFG has confidence in its position and the arguments that support it,” the spokesperson said.

The ACCC will also argue it was not commercially viable for new entrants to incur the cost of establishing their own distribution network to distribute single-wrapped ice creams across Australia.

“We allege that, as a result of the agreement and Peters’ conduct, other ice cream suppliers had no commercially viable way of distributing their single-serve ice creams to national petrol and convenience retailers,” Mr Sims said.

“We also allege that a substantial purpose of Peters engaging in the conduct was to protect its market position from competitors, as one of only two major suppliers of single-wrapped ice creams, who together held a combined market share of over 95 per cent during the relevant time,” Mr Sims said.

He said the agreement with PFD “reduced competition and may have deprived ice cream lovers of a variety of choice or the benefit of lower prices when purchasing an ice cream at one of these stores”.

The Peters spokesperson said for years there had been “an extensive number of commercially viable distribution options available for the delivery of ice cream products around Australia to petrol and convenience retailers”.

During the course of the ACCC’s investigation, Peters advised the ACCC, without admission, that it had recently entered into a new agreement with PFD that no longer included a term restricting PFD from distributing ice cream products for other ice cream producers.

The ACCC is seeking declarations, pecuniary penalties, a compliance program order and costs.

Extracted from ABC

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