Australia’s consumer watchdog has launched legal proceedings against ice cream giant Peters, alleging that it engaged in conduct, which prevented competition for the supply of single-wrapped ice creams to petrol and convenience retailers.
But Australasian Food Group (AFG) trading as Peters, has denied these allegation and vowed to “vigorously defend” the legal proceedings.
The Australian Competition and Consumer Commission (ACCC) alleges that between November 2014 and December 2019, Peters engaged in exclusive dealing by entering into an agreement with PFD Food Services, which included a condition that PFD could not distribute any competing ice cream products in Australia.
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 also says that during this term, PFD made requests to distribute competing ice creams, but Peters rejected these requests.
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.
AFG has defended its position, saying that it did not freeze out competition and that for many years there have been alternate routes to market.
“AFG has confidence in its position and the arguments that support it. For many years there have been an extensive number of commercially viable distribution options available for the delivery of ice cream products around Australia to petrol and convenience retailers.
“It is our position that other manufacturers have not been prevented from supplying their products to retailers by virtue of AFG’s distribution arrangements with PFD.”
Peters is one of the largest suppliers of single serve ice cream products in Australia, including brands such as Drumstick, Maxibon, Connoisseur and Frosty Fruits.
At the time, Peters was one of only two major suppliers of single-wrapped ice creams, who together held a combined market share of more than 95 per cent.
ACCC Chair Rod Sims, said: “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 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,” Sims said.
During the course of the ACCC’s 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 ice cream producers.
The ACCC is seeking declarations, pecuniary penalties, a compliance program order and costs.