COMPETITION watchdog investigations into plans by big beef processor JBS Australia to move into pork in a significant way via the purchase of Rivalea have found third-party service kills are unlikely be hindered.
Further, the ability of competing smallgoods manaufacturers to source fresh pork also would not be frustrated, the Australian Competition and Consumer Commission has concluded.
JBS, which operates abattoirs, value-add facilities and feedlots for a number of species across Australia's eastern seaboard, announced mid-year its intention to pay Singapore-listed food company QAF Limited $175 million for Rivalea Holdings and Oxdale Dairy Enterprise, together known as Rivalea.
Rivalea farms and processes pigs in Laverton, Victoria and in Corowa, New South Wales. It holds the majority share of Diamond Valley Pork and supplies fresh and value-added products to wholesalers and retailers.
JBS is already the largest smallgoods producer in Australia. It owns the Primo brand and niche pork brands.
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The move was met with concerns from the wider animal protein industry about price hikes for service kills at Diamond Valley and reduced supply to downstream smallgoods producers.
The ACCC said it closely considered those two issues - in particular concerns raised by pig producers about their ongoing access to service kills - and would not oppose the acquisition.
The majority of the pigs slaughtered at Diamond Valley there are from non-Rivalea farms, where Rivalea's Corowa abattoir is a closed system for biosecurity reasons and exclusively slaughters Rivalea's own pigs.
ACCC deputy chair Mick Keogh said a strategy to foreclose or frustrate access to service kill customers was unlikely as it would create significant commercial risks for JBS, including a loss of throughput and profit at Diamond Valley.
The ACCC also found it was unlikely JBS would have the incentive to foreclose or frustrate access to fresh domestic pork for its wholesale and smallgoods competitors.
"Fresh pork can be transported significant distances, so there are alternative places where wholesalers can acquire fresh pork if JBS refuses supply," Mr Keogh said.
The ACCC also made the point the majority of pork used for smallgoods manufacturing can be substituted with pork sourced from other places, including imports.
That would continue to provide a strong competitive constraint on JBS.
Mr Keogh did say, however, the ACCC would closely watch trading behaviour in the pork industry, and would not hesitate to take enforcement action if there was any conduct that breached the competition or fair trading provisions of the Competition and Consumer Act.
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