The competition watchdog is taking Peters Ice Cream to court over claims the prominent ice cream maker prevented other companies from supplying single-wrapped ice creams to petrol stations and convenience stores.
The Australian Competition and Consumer Commission (ACCC) said on Friday it has commenced legal proceedings in the Federal Court against Australasian Food Group Pty Ltd, which trades as Peters Ice Cream.
Peters Ice Cream supplies some of the most well-known brands of single-serve ice creams in Australia, including Drumstick, Maxibon, Connoisseur, Billabong and Frosty Fruits.
The ACCC is alleging Peters Ice Cream engaged in ‘exclusive dealing’ between November 2014 and December 2019 through an agreement with distribution company PFD Food Services Pty Ltd.
The agreement was for PFD Food Services to distribute Peters Ice Cream’s single-wrapped products to petrol stations and convenience stores across the country, except in locations in Sydney, Melbourne and Brisbane where Peters distributed its products directly.
The agreement allegedly included a condition that prevented PFD Food Services from also distributing ice cream products from competitors in certain locations.
According to the ACCC, PFD Food Services requested to distribute competing products during the time of the agreement but Peters Ice Cream rejected those requests.
The ACCC says the arrangements amounted to ‘exclusive dealing’, which occurs when one trading partner imposes restrictions on the other’s ability to trade with others, or in other areas.
Exclusive dealing is illegal when it substantially lessens competition or is likely to do so.
In this case, the ACCC is arguing that PFD Food Services would have been the only distributor available for new suppliers seeking to reach service stations and convenience stores in a commercially viable way, as the costs of establishing their own distribution networks for single-wrapped products would have been too high.
The ACCC will argue the conduct may have limited consumer choice and price competition in the market.
“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,” said ACCC chair Rod Sims.
“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.”
The ACCC will seek penalties against the company, as well as declarations and an order for the company to undertake a compliance program.
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However, a spokesperson for Australasian Food Group (AFG) said the company plans to “vigorously defend any proceedings”.
“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,” the spokesperson said.
“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.”
According to the ACCC, Peters has recently entered into a new agreement with PFD Food Services which no longer prevents the company from distributing other ice cream products from competitors.
SmartCompany has contacted PFD Food Services for comment.
This article was updated at 12.27pm to include a statement from Australasian Food Group.