Woolworths’ takeover of distributor PFD Food Services will go ahead despite concerns the move will eventually lead to fewer workers in the industry.
The Australian Competition and Consumer Commission on Thursday allowed Woolworths to buy 65 per cent of shares in PFD, which delivers food to cafes, restaurants, hotels, clubs and more.
The purchase will cost $552 million.
Independent Food Distributors of Australia chairman Richard Hinson said he was disappointed the retail giant was allowed to buy one of the most significant players in distribution.
He said Woolworths would misuse its market power.
This would lead to the decline of rival distributors and cost hundreds of jobs, particularly in regional areas, Mr Hinson said.
The competition watchdog said PFD had about 15 per cent of the wholesale food distribution market.
ACCC chair Rod Sims said there were several competitors with similar market share.
He said the nature of their offerings also meant a reduction in competition was not likely.
However Mr Sims did say Woolworths’ purchase would likely lead to changes in the industry.
The watchdog made its decision after an investigation in which many people voiced concerns.
Master Grocers Association boss Jos de Bruin, like Mr Hinson, feared Woolworths would drive distributors out of business.
He said food suppliers would later have fewer distribution choices.
Woolworths said PFD would continue operating independently and have a separate board of directors.
The purchase will be completed by the end of June.
PFD chief executive Kerry Smith said customer and supplier relationships would remain unchanged by the investment.
Woolworths shares were up 0.83 per cent to $42.98 at 1355 AEST.