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JBS Foods hits a snag in Rivalea takeover plan

Planned takeover may impact pork prices by lessening competition, says ACCC.

The purchase of Rivalea Holdings and sister company Oxdale Dairy Enterprise by JBS Australia may reduce competition in the sector, according to a preliminary finding by the ACCC. 

JBS is Australia’s largest meat and food processing company, and one of the biggest in the world and Rivalea farms and processes pigs. In a preliminary finding on JBS’s acquisition approval application, the ACCC says the deal would give JBS a significant presence in pig farming, export-accredited pig abattoirs, and smallgoods through its Primo brand.

“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,” said ACCC deputy chair Mick Keogh.

In further explanation of its position, the ACCC said that Rivalea’s Diamond Valley Pork abattoir currently provides slaughtering services to third parties. 

“The ACCC is concerned that post-acquisition JBS may have the incentive, particularly due to its ownership of [smallgoods brand] Primo, to frustrate service kills at that abattoir by increasing prices, offering less favourable terms, or foreclosing access,” the competition regulator said in a statement.

“The ACCC is also concerned that JBS may increase the price of fresh pork or reduce supply to competing smallgoods producers and pork wholesalers.”

Keogh added: “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. 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.” 

While it awaits a response from interested parties, the ACCC said it is considering whether rival smallgoods producers’ and wholesalers’ reduced access to fresh pork or increased costs may also impact retail supply.

Further submissions will be accepted before September 30 after which a final determination will be made.

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