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ACCC Go-ahead for JBS Acquisition of Primo

10 February 2015

AUSTRALIA - The Australian Competition and Consumer Commission is not to oppose the proposed acquisition of Australian Consolidated Food Holdings Pty Limited, Primo, by the beef processing giant JBS USA Holdings.

However, the decision has been described as disappointing by New South Wales senator, John Williams.

As part of the review process, Senator Williams lodged submissions on behalf of concerned people in the livestock industry, and their common worry was that the takeover would lessen competition at the saleyards.

The ACCC received submissions from a range of interested parties, including farmers, competing abattoirs, and meat and small goods suppliers and customers.

Many industry participants expressed concern that the proposed acquisition would result in less competition in the market for the acquisition of fat cattle in northern NSW and Queensland.

But ACCC Chairman Rod Sims said “The ACCC undertook a detailed assessment and determined that Primo is currently not a strong competitive constraint on JBS. JBS’s abattoirs in Queensland and Primo’s abattoir at Scone are more than 500km apart.

“Furthermore, the increase in market share as a result of the proposed acquisition would be relatively small and JBS would continue to be constrained in the market for the acquisition of fat cattle by a number of alternative abattoirs and supermarket chains, in the northern NSW and southern Queensland region.”

While the ACCC determined that, in this instance, the proposed acquisition would be unlikely to raise significant competition concerns, the ACCC is wary of the potential impact of further consolidation of abattoirs.

“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” Mr Sims said.

The ACCC also considered whether the proposed acquisition would have any competitive impact on meat customers, small goods customers or the provision of fat cattle service kills, but did not consider that any significant competition concerns arose.

Senator Williams hit pout at the decision saying that the ACCC agreed there is some lessening of competition, but then claimed it is not a substantial lessening of competition.

He said the ACCC claimed Primo is not a strong competitive restraint on JBS and he added that it tried to justify the distance of more than 500 kilometres between Primo’s Scone abattoir and JBS’s Queensland abattoirs to support its case.

“This is out of touch with reality because cattle can and are transported many hundreds, even thousands of kilometres,” said Senator Williams.

“I find it confusing that on one hand the ACCC will not oppose this acquisition, yet in the next breath says it is wary of the potential impact of the further consolidation of abattoirs. If that is true, why didn’t it act in this instance?

“From talking with farmers and those in the livestock selling industry I know this decision will be met with dismay, and only time will tell whether it is right,” Senator Williams said.

TheCattleSite News Desk

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