The Australian Competition and Consumer Commission (ACCC) has outlined its “strong” concerns about the proposed $175 million takeover of pork farming and processing business, Rivalea Holdings.
- The ACCC has “strong” concerns about JBS taking over Rivalea pig operations and its meat processing
- It would give JBS control of three of the four export pork abattoirs in southern Australia
- JBS says it intends to provide a comprehensive response to the ACCC during this next phase of public consultation
The takeover represents a major purchase for JBS, which is the world’s largest meat processor.
The Brazilian-based company employs more than 11,000 people in Australia and conducts more than a quarter of the nation’s meat kill.
If it gets the green light to purchase Rivalea, JBS would have control of three of the four export pork abattoirs in southern Australia.
JBS already owns a pig abattoir at Port Wakefield in South Australia and would pick up the two export-accredited abattoirs at Corowa, in southern New South Wales, and Victoria’s largest pig abattoir, Diamond Valley Pork at Laverton, near Melbourne, which has the capacity to process 13,500 pigs per week.
“So with those three abattoirs they would be in a very strong position in relation to the provision of service kills in south-eastern Australia,” ACCC deputy chair Mick Keogh said.
“And when we add to that the ownership of Primo, which has a very strong position in the smallgoods market, that creates some concerns around the extent to which those vertical arrangements could be used to disadvantage other competitors … who have to source their fresh pork through one of their abattoirs,” he said.
Takeover could push pork prices higher
The ACCC said the purchase of Rivalea could give JBS incentive to frustrate service kills by increasing prices, offering less favourable terms, or foreclosing access.
“That would flow through to retail if, for example, there was a substantial cost increase imposed on the uses of those facilities,” Mr Keogh said.
“So the processors would potentially face higher costs through the slaughter facilities and that, in turn, would have to translate into higher prices at retail and that’s the concern,” he said.
JBS defends takeover
In a statement, JBS Australia acknowledged the ACCC’s issues of concern around third party processing at Diamond Valley Pork (DVP) and access to fresh pork for downstream businesses.
“JBS intends to provide a comprehensive response to the ACCC regarding these matters during this next phase of public consultation,” JBS Australia CEO Brent Eastwood said.
“JBS has repeatedly and publicly said it will continue to provide service kills at DVP and we have provided these assurances in writing to all existing DVP customers and the ACCC,” Mr Eastwood said in a statement.
The ACCC is due to release its final decision on December 9, 2021.