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November 26, 2020

Australia’s Peters Ice Cream to be prosecuted by competition watchdog

Australia's competition watchdog has initiated Federal Court proceedings against local business Peters Ice Cream.

By Leonie Barrie

The Australian Competition and Consumer Commission (ACCC) has initiated Federal Court proceedings against local business Peters Ice Cream for its trading practises.

It is alleged by the consumer watchdog that Peters – a subsidiary of Froneri, the UK-based ice-cream company that is a joint venture between food giant Nestlé and private-equity firm PAI Partners – engaged in conduct which hindered or prevented competition for the supply of single-wrapped ice creams to petrol and convenience retailers.

The ACCC alleges that from around November 2014 to December 2019, Peters engaged in exclusive dealing by entering into, and giving effect to, an agreement with PFD Food Services to distribute its single-wrapped ice creams and frozen confectionery products to petrol and convenience retailers nationally. 

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

It added that during the term of the distribution agreement, PFD made requests to distribute competing ice-cream products to petrol and convenience retailers nationally, but these requests were rejected by Peters.

The ACCC alleges that, for new entrants, PFD was the only distributor capable of distributing single-wrapped ice-cream products 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.

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 nationally.

ACCC chair Rod Sims said: “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.

“Our case is that the distribution agreement and 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.

“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% during the relevant time.

“We allege that this conduct 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.”

During the course of its investigation, Peters advised the ACCC, without admission, that it has recently entered into a new agreement with PFD which no longer includes a term restricting PFD from distributing ice-cream products for other producers.

In taking the legal action, the ACCC is seeking declarations, pecuniary penalties, a compliance programme order and costs.

Peters is one of the largest suppliers of single-serve ice-cream products in Australia with brands such as Drumstick, Maxibon, Connoisseur, Frosty Fruits and BillaBong.

During the relevant period, Peters directly distributed most of its ice creams to areas in Sydney, Melbourne and Brisbane, while PFD distributed or re-supplied Peters’ ice creams in the majority of other areas.

just-food has asked Peters for a response to the ACCC’s allegations.

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