The ACCC has approved the acquisition of Australia's biggest smallgoods manufacturer, Australian Consolidated Food Holdings (Primo), by JBS USA, the nation's largest meat processor.
The ACCC had received submissions from many industry participants including farmers, competing abattoirs, suppliers and customers who had expressed concern that the proposed acquisition would result in less competition in the market for the acquisition of fat cattle in northern NSW and Queensland.
However following an assessment by the ACCC, the competition watchdog determined that private equity owned Australian Consolidated Food Holdings, whose brands include Primo and Hans, was currently not a strong competitive constraint on JBS.
It also noted that JBS’s abattoirs in Queensland and Primo’s abattoir at Scone are more than 500km apart.
“Furthermore, the increase in market share as a result of the proposed acquisition would be relatively small and JBS would continue to be constrained in the market for the acquisition of fat cattle by a number of alternative abattoirs and supermarket chains, in the northern NSW and southern Queensland region,” ACCC Chairman Rod Sims said.
While the ACCC determined that, in this instance, the proposed acquisition would be unlikely to raise significant competition concerns, the ACCC is wary of the potential impact of further consolidation of abattoirs.
“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” Mr Sims said.
Primo Group CEO, Paul Hitchcock, welcomed the proposed sale to JBS. “While it will remain very much business as usual for our employees, suppliers and customers, this transaction offers tremendous opportunities for a producer of high quality products like Primo,” Mr Hitchcock said. “We look forward to being part of JBS and capitalising on its international distribution network.”
JBS USA Holdings Inc is a meat processor listed on the Brazil stock exchange with ten processing plants in Australia, including beef processing capacity in Dinmore and Toowoomba in southern Queensland. JBS Australia processes beef, veal, lamb and mutton. JBS Australia also processes pigs on behalf of a third party at its Devonport plant in Tasmania.