The Australian Competition and Consumer Commission (ACCC) has given its tick of approval for the $175 million takeover of pork farming and processing business Rivalea Holdings by the world’s largest meat processor, JBS, despite earlier issuing “strong concerns”.
- ACCC will not oppose JBS’ proposed $175 million takeover of Rivalea Holdings
- In September the ACCC held “strong concerns” about the acquisition
- ACCC said competition in the pork slaughter and supply chain would not be “substantially lessened”
The proposed takeover includes Victoria’s largest pig abattoir, Diamond Valley Pork at Laverton in Melbourne, which has the capacity to process 13,500 pigs per week.
Rivalea also farms pigs and operates an export-accredited abattoir at Corowa in southern New South Wales.
In September, the ACCC said it was concerned the acquisition could give JBS an incentive to frustrate access to service kills by increasing prices, offering less favourable terms or foreclosing access, and that consumers could face higher pork prices if processors were lumped with higher slaughter costs.
But in the months since, JBS has managed to persuade the competition watchdog that it would continue to provide service kills at Diamond Valley Pork.
ACCC deputy chair Mick Keogh told the Victorian Country Hour, the ACCC had been persuaded that the acquisition was unlikely to “substantially lessen competition” and therefore would not breach the Competition and Consumer Act.
“There was a lot of concern expressed by pig producers who utilise the Diamond Valley abattoir and its contract kill services … that the takeover may result in growers having less access to that and therefore it could be anti competitive,” Mr Keogh said.
But he said after looking closely at the transaction the ACCC found there was a low risk that JBS would frustrate wholesalers’ access to third-party service kills.
“You have to look at the incentives and the incentives of the owner is to maximise throughput and therefore profit,” Mr Keogh said.
“That was the case under Rivalea and we wouldn’t expect that to change greatly with the new ownership.”
JBS already owns a pig abattoir at Port Wakefield in South Australia so the acquisition of Rivalea would give JBS control over a third of Australia’s pig meat.
Mr Keogh said any further acquisitions in the pork industry in Australia would require a high level of scrutiny.
Mr Keogh said 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”.
Pig producers welcome takeover
Northern Victorian pig farmer and Victorian Farmers Federation (VFF) pig group president Tim Kingma said he was thrilled there is a company wanting to invest in the pork industry.
Mr Kingma is confident JBS will continue offering kill services for smaller producers at its Diamond Valley abattoir.
“From a VFF point of view our biggest concern was the ability for pig farmers to get their pigs slaughtered at Diamond Valley Pork,” he said.
“We had a meeting with JBS and the ACCC, and to JBS’ credit, they were always very quick to reassure us that nothing would change.
“My pigs go to Diamond Valley. I don’t have a contract with Rivalea or Diamond Valley, it’s always been a handshake agreement and that’s what it will be with JBS.”
Mr Kingma believes the JBS takeover will also increase Australia’s share of processed pork smallgoods and meats.
“Because of their [JBS] background with smallgoods, the majority of the meat with our smallgoods and our hams isn’t Australian, so hopefully we get more Aussies eating our pork,” he said.
JBS assurance of ‘business as usual’
In a statement, JBS said it had worked constructively with the ACCC and key customers to assure them that JBS intends to have a business as usual approach to the Rivalea operations.
“JBS will continue to provide kill services at DVP for customers and also grow the customer base,” JBS Australia CEO Brent Eastwood said.
“We have provided this assurance directly to all DVP customers in writing, to local pork groups,” he said.
“JBS has a long and proud history of supporting and growing its Australian businesses – investing heavily in its local operations and domestic brands, while at the same time providing employment opportunities and supporting the regional economies in which we operate.
“We will employ this same locally-minded approach at Rivalea.”
The takeover will now go before the Foreign Investment Review Board for approval.
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