Nationals Senator criticises ACCC decision not to oppose acquisition of Primo by JBS
The decision by the Australian Competition and Consumer Commission (ACCC) to not oppose the proposed acquisition of Australian-based smallgoods manufacturer Primo by the Australian arm of Brazil-owned meat processor JBS has been criticised by Nationals Senator John Williams.
Australian Food News reported in November 2014 JBS Australia had signed a $1.45 billion deal to acquire ham, bacon and smallgoods producer Primo Smallgoods.
The brands of the Primo business include not just Primo but also Hans Continental Smallgoods and Beehive. The Company is Australia’s largest producer of ham, bacon and smallgoods. Primo Smallgoods’ operations include five processing plants operating across Australia as well as New Zealand, employing more than 4,000 people. Primo is majority owned by Affinity Equity Partners (a private equity firm based in Singapore).
Primo Smallgoods was founded in 1985 by Sydney entrepreneur Paul Lederer with approximately 38 employees, operating a manufacturing facility in Homebush, Sydney. In 1991, the Company expanded into Queensland with the acquisition of Gold Cob Smallgoods; in 1998 the Company purchased an abattoir at Port Wakefield in South Australia; and in 1999 the Company purchased a beef abattoir at Scone in the Hunter Valley, and a distribution facility in Melbourne. In 2009, Primo Smallgoods acquired the entire business operations of former competitor – Hans Continental Smallgoods. Nationally, the Company has in excess of 4,000 employees.
Industry participants “express concern” about reduced competition
The ACCC announced on Friday that it would not oppose JBS USA Holdings Inc’s (JBS’s) proposed acquisition of Australian Consolidated Food Holdings Pty Limited (Primo).
The ACCC said it received submissions from a range of interested parties, including farmers, competing abattoirs, and meat and smallgoods 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.
“The ACCC undertook a detailed assessment and determined that Primo is currently not a strong competitive constraint on JBS,” said Rod Sims, ACCC Chairman. “JBS’s abattoirs in Queensland and Primo’s abattoir at Scone are more than 500km apart,” he said.
“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,” Mr Sims said.
Further consolidation would be ‘concerning’, ACCC
While the ACCC determined that, in this instance, the proposed acquisition would be unlikely to raise significant competition concerns, the ACCC said it was 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.
JBS USA Holdings Inc is a meat processor listed on the Brazil stock exchange with ten processing plants in Australia, including beef processing capacity in Dinmore and Toowoomba in southern Queensland. JBS Australia processes beef, veal, lamb and mutton. JBS Australia also processes pigs on behalf of a third party at its Devonport plant in Tasmania.
ACCC decision ‘disappointing’, Senator Williams
However Senator Williams, Nationals Senator for New South Wales, has said the ACCC’s decision was “very disappointing”.
As part of the review process, Senator John Williams lodged submissions on behalf of concerned people in the livestock industry, and he said their common worry was that the takeover would lessen competition at the saleyards.
“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,” Senator Williams said. “If that is true, why didn’t it act in this instance?” he said.
Senator Williams said the ACCC’s use of the distance of more than 500 kilometres between Primo’s Scone abattoir and JBS’s Queensland abattoirs to support its decision not to oppose the acquisition was “out of touch with reality because cattle can and are transported many hundreds, even thousands of kilometres”.
“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.
The voting patterns in Australia’s federal election on 2 July 2016 show Australians to be somewhat d...
Unilever and The Smith’s Snackfood Company, which is owned by Pepsi Co, have each paid AUD $10, 800 ...
The University of Queensland and Horticulture Innovation Australia are partnering to investigate whe...
A more buoyant Woolworths and expansion from Aldi has seen Coles’ market share decline in 2016-17, f...
The Australian Manufacturing Workers Union has urged Australian consumers to boycott Streets’ ice cr...
The prohibition of ‘superfood’ hemp is over.
Australia’s first hemp crop is ready to harvest after the plant was legalised as a food in Australia...
A possible class action lawsuit against Woolworths over a 2015 share dive incident has lost its fina...