A proposal by Australia's Woolworths to buy about two-thirds of PFD Food Services and its properties may hurt competition in the food sector, the country's competition regulator said on Tuesday.
The proposed acquisition could increase Australia's biggest grocer's already "substantial" bargaining power in its dealings with food manufacturers, Australian Competition and Consumer Commission (ACCC) Chair Rod Sims said in a statement.
Woolworths and wholesale food distributor PFD both acquire food and groceries from suppliers such as frozen food makers, dairy processors and manufacturers of pasta and sauces.
Woolworths said in August it would pay A$552 million ($415.7 million) for a 65% stake in PFD and 26 freehold properties that would be leased back to the country's second-biggest food service firm.
The ACCC said it was also looking into whether the acquisition could hamper downstream competition, as PFD is also a supplier to Woolworths' competitors.
Woolworths said it was confident it would be able to address potential concerns by the regulator but does not see a "reduction in competition" from the deal.
A final decision on the deal is expected by April 22 next year.
PFD was not immediately available for comment.
($1 = 1.3278 Australian dollars)
(Reporting by Arpit Nayak in Bengaluru; editing by Richard Pullin and Lisa Shumaker)
