The ACCC has outlined its preliminary competition concerns about JBS Australia Pty Ltd's (JBS) proposed acquisition of Rivalea Holdings Pty Ltd and Oxdale Dairy Enterprise Pty Ltd (together, Rivalea) in a statement of issues published today.
JBS is Australia's largest meat and food processing company. Rivalea farms and processes pigs. If the acquisition proceeds, JBS will have a significant presence in pig farming, export accredited pig abattoirs, and smallgoods through its Primo brand.
"The ACCC's preliminary view is that while JBS and Rivalea do not compete closely, the proposed acquisition may give rise to vertical integration concerns," ACCC Deputy Chair Mick Keogh said.
Rivalea's Diamond Valley Pork abattoir currently provides service kills to third parties. The ACCC is concerned that post-acquisition JBS may have the incentive, particularly due to its ownership of Primo, to frustrate service kills at that abattoir by increasing prices, offering less favourable terms, or foreclosing access.
The ACCC is also concerned that JBS may increase the price of fresh pork or reduce supply to competing smallgoods producers and pork wholesalers. The ACCC is considering whether rival smallgoods producers and wholesalers' reduced access to fresh pork or increased costs may also impact retail supply.
"We are concerned that JBS' existing interests may give it the incentive to restrict access to service kills at the Diamond Valley Pork abattoir, as well as frustrating access to fresh pork for its downstream rivals in smallgoods production and pork wholesaling. Our concern is not limited to JBS potentially denying access to processing facilities, it's also about the price and terms on which access would be provided," Mr Keogh said
The ACCC believes the proposed acquisition is unlikely to raise horizontal overlap concerns in relation to the acquisition of slaughter weight pigs, supply of service kills or pork processing, as JBS and Rivalea do not compete closely.
The ACCC has published a statement of issues and is seeking further information from interested parties by 30 September 2021. More information is available on the ACCC's public register page.
Background
JBS operates abattoirs, value-add facilities and feedlots for a number of species across Australia's eastern seaboard. JBS' abattoir at Port Wakefield (SA) supplies service kills and further processing such as boning and value-adding services. JBS also supplies fresh pork, value-added pork, pork smallgoods and cooked pork products in Australia.
Rivalea has commercial activities in feedstock production, pig farming, service kills, processing such as boning and value-adding services, and the distribution of fresh pork and value-added pork products to wholesalers and retailers in Australia. Rivalea has ownership interests in two abattoirs in Australia, one in Laverton, (Vic) and one in Corowa (NSW) that supply slaughter and processing services.
