ACCC green lights Cargill-Teys JV

Posted by Nicole Eckersley on 13th July 2011

The Australian Competition and Consumer Commission has announced that it will not oppose the proposed merger of the meat processing operations of Teys Bros (Holdings) Pty Ltd and Cargill Beef Australia.

“The ACCC formed the view that the proposed merger would be unlikely to substantially lessen competition in any of the markets examined,” ACCC chairman Graeme Samuel said.

Cargill operates two abattoirs and a feedlot in New South Wales which supply both the domestic and export beef markets, with the abattoirs in Tamworth and Wagga and the feedlot at Stockinbingal.

Teys operates four beef abattoirs at Biloela, Beenleigh and Rockhampton in Queensland and Naracoorte in South Australia. Teys also operates a feedlot near Condamine in southern Queensland.

Brad Teys, CEO of Teys Bros, applauded the decision.

“We are pleased to be one more step closer in joining our business with Cargill.  The new joint venture will give us the scale and flexibility to better service our domestic and export customers to grow our business. This will also help us to expand the number of foreign markets we are currently selling Australian beef,” said Teys.

“Both Teys and Cargill are committed to keeping the plants that are operating today open after the merger. The combined business will make us more competitive in serving both our Australian and export customers.”

Cargill was also positive about the move.

“Combining our businesses provides the experience, scope and scale to for us to build a world-class beef processing company and that translates into more job security for our employees and drives our growth for cattle from Australian producers,” said Andrew MacPherson, managing director, Cargill Beef Australia.

The ACCC said it had considered the competition effects of the proposed merger in a number of markets. These included the acquisition of ‘fat’ cattle ready for slaughter, the acquisition of ‘feeder’ cattle which are destined for feedlots, and for the supply of processed beef to retailers and wholesalers, as well as the possibility of Cargill using its grain trading position to deny supply or raise prices for competing feedlot operators.

“The ACCC concluded that the proposed merger would be unlikely to result in a substantial lessening of competition in any of the markets it examined, largely due to the fact that the operations of Teys and Cargill have limited geographical overlap,” Mr Samuel said.
The proposed joint venture still requires approval from the Foreign Investment Review Board (FIRB) and foreign antitrust regulators before it can be finalized.