The Australian Competition and Consumer Commission says it won’t oppose JBS Australia’s proposed acquisition of pig processor Rivalea. JBS announced the $175 million deal in June.
Rivalea is the majority owner of the Diamond Valley Pork abattoir and processing facility in Laverton, Victoria, and an abattoir and processing facility in Corowa, New South Wales. Rivalea also grows pigs and supplies fresh pork and value-added pork products to wholesalers and retailers in Australia.
JBS has one pig abattoir and processing facility in South Australia. It processes and supplies fresh pork, value-added pork products, and pork smallgoods to wholesalers and retailers in Australia, including through its subsidiary Primo.
ACCC deputy chair Mick Keogh said the commission didn’t find the deal would substantially lessen competition.
The ACCC’s investigation focused on the impact the proposed acquisition would have on service kill customers at Diamond Valley Pork, and the flow on implications for pork wholesalers and smallgoods producers.
Rivalea’s Corowa abattoir is a closed system for biosecurity reasons, so does not provide third-party service kills, it said.
“The ACCC closely considered the potential for JBS to frustrate or foreclose pork producers and wholesalers’ access to third-party service kills and competing smallgoods manufacturers’ access to fresh pork. In particular, we paid close attention to concerns raised by pig producers about their ongoing access to service kills,” Keogh said.
According to the ACCC, the Diamond Valley Pork abattoir is an integral asset within the pork supply chain for pig producers, pork processors and smallgoods producers. It operates mostly as a service kill abattoir and a majority of the pigs slaughtered there are from non-Rivalea farms, it said.
“Although Diamond Valley Pork is a very important asset in the supply chain, we consider that a strategy to foreclose or frustrate access to service kill customers is unlikely as it would create significant commercial risks for JBS, including a loss of throughput and profit at Diamond Valley Pork,” Keogh said.
The ACCC found it was unlikely that JBS would have the incentive to foreclose or frustrate access to fresh domestic pork for its wholesale and smallgoods competitors because there were alternative places for wholesalers to buy fresh pork if JBS refused supply.
The commission also found most pork used for smallgoods manufacturing can be substituted with pork sourced from other places, including imports. This will continue to provide a strong competitive constraint on JBS for most smallgoods manufacturers, it said.
The ACCC also found that JBS’ acquisition of Rivalea is unlikely to substantially lessen competition in other markets, such as the acquisition of slaughter weight pigs, supply of pork processing and wholesale supply of fresh pork.
“Our assessment was based solely on the test required by Australia’s merger law, which requires us to consider whether an acquisition is likely to substantially lessen competition in any market. The ACCC is unable to consider other factors in deciding whether to oppose an acquisition,” Keogh said.
“However, the ACCC will be closely watching trading behaviour in the pork industry, and will not hesitate to take enforcement action if there is any conduct that breaches the competition or fair trading provisions of the Competition and Consumer Act.”
