The Australian Competition and Consumer Commission (ACCC) has raised preliminary competition concerns with JBS S.A.’s $175 million proposed acquisition of pig breeder and processing company Rivalea.
In June, JBS had announced it had signed an agreement to acquire 100 per cent Rivalea Holdings and Oxdale Dairy Enterprise (together, “Rivalea”) from Singapore-listed food company QAF Limited for $175 million.
ACCC deputy chair Mick Keogh said: “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.”
With JBS being Australia’s largest meat and food processing company, a successful acquisition of Rivalea will lead to a strong presence in pig farming, export accredited pig abattoirs and smallgoods through its Primo brand.
Due to JBS’ ownership of Primo, the ACCC has raised concerns that the meat giant may have incentive to frustrate third-party service kills provided by Rivalea’s Diamond Valley Pork abattoir by increasing prices, offering less favourable terms, or foreclosing access.
“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,” said Keogh.
The ACCC stated it is also concerned of JBS increasing the prices of fresh pork or reducing supply to smallgoods producers and pork wholesalers.
“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,” he said.
An analysis on whether reduced access or increased prices of fresh pork for rival smallgoods producers and wholesalers will impact retail supply is being conducted by the ACCC.
Since JBS and Rivalea do not compete closely, the ACCC believes the proposed acquisition is unlikely to create horizontal overlap concerns in terms of the acquisition of slaughter weight pigs, supply of service kills, or pork processing.