Peters Ice Cream manufacturer of Connoisseur to pay $12 million penalty for anti-competitive exclusive dealing
The Federal Court has ordered that Australasian Food Group, trading as Peters Ice Cream, pay a $12 million penalty for anti-competitive conduct in relation to the distribution of ice creams sold in petrol stations and convenience stores, in proceedings brought by the ACCC.
Peters Ice Cream admitted that, from November 2014 to December 2019, it acquired distribution services from PFD Food Services on condition that PFD would not sell or distribute competitors’ single serve ice cream products in various geographic areas throughout Australia without the prior written consent of Peters Ice Cream.
Peters Ice Cream admitted that in doing so, it had engaged in exclusive dealing conduct that had the likely effect of substantially lessening competition in the market for the supply by manufacturers of single serve ice cream and frozen confectionary products.
Peters Ice Cream owns a number of ice cream brands, including Connoisseur, Drumstick, Maxibon and Frosty Fruits. It is one of two major manufacturers of single serve ice cream products sold in Australian petrol stations and convenience stores.
PFD is Australia’s largest distributor of single serve ice creams and is able to reach more than 90 per cent of Australian postcodes.
“This is an important competition law case involving products enjoyed by many Australians,” ACCC Chair Gina Cass-Gottlieb said.
“We took this action because we were concerned that Peters Ice Cream’s conduct could reduce competition in this market and impact on the choice of single serve ice creams available to consumers.”
“Peters Ice Cream admitted, that if PFD had not been restricted from distributing other manufacturers’ ice cream products, it was likely that one or more potential competitors would have entered or expanded in this market,” Ms Cass-Gottlieb said.
Potential competitors to Peters Ice Cream in the relevant period for single serve ice creams included Bulla, Gelativo and Pure Pops. PFD was approached by ice cream manufacturers to distribute new single serve ice cream products to some national petrol and convenience retailers. However, PFD advised that it could not distribute those products due to its exclusivity arrangement with Peters.
“This case is a reminder to all businesses of the serious and costly consequences of engaging in anti-competitive conduct,” Ms Cass-Gottlieb said.
“The ACCC is targeting exclusive arrangements by firms with market power that impact competition as one of our compliance and enforcement priorities for 2022/23.”
Peters Ice Cream’s restriction on PFD covered much of Australia geographically, including Western Australia, Tasmania, South Australia (inclusive of Adelaide from August 2015), ACT, PFD’s Darwin distribution zone, and regional areas in New South Wales, Victoria and Queensland.
Peters Ice Cream was also ordered to establish a compliance program for a period of three years and pay a contribution to the ACCC’s legal costs.
Peters admitted that it had contravened the Competition and Consumer Act and made joint submissions with the ACCC in respect of penalties and orders.
Exclusive Dealing defined
Broadly speaking, exclusive dealing occurs when one person trading with another imposes some restrictions on the other’s freedom to choose with whom, in what, or where they deal. Exclusive dealing will only breach the Competition and Consumer Act when it has the purpose, effect or likely effect of substantially lessening competition.
Peters Ice Cream is an Australian ice cream manufacturer founded in 1907 which is now a subsidiary of British global ice cream manufacturer Froneri. Peters Ice Cream manufactures various single serve ice creams and tub and multipack ice cream products. Examples of the single serve ice creams that Peters Ice Cream manufactures include those sold under the Connoisseur, Drumstick, Maxibon and Frosty Fruits brands.
PFD is an Australian food distributor, offering national distribution services for dry, frozen and chilled goods. During the relevant period, it was the largest distributor distributing nationally, offering distribution to at least 90 per cent of postcodes throughout Australia. PFD currently has 68 distribution branches across Australia.
PFD’s distribution business included distribution of a broad range of dry, frozen and chilled goods to national petrol and convenience retailers, including BP, Caltex, and Woolworths Petrol. PFD distributed Peters Ice Cream’s single serve ice creams in a wide range of geographic areas of Australia.