Competition regulator has concerns over JBS-Rivalea deal

Australian Competition & Consumer Commission deputy chair says the proposed acquisition ‘may give rise to vertical integration concerns’.

The Australian Competition & Consumer Commission (ACCC) has expressed concerns about potential issues that might arise if JBS’ proposed acquisition of Rivalea Holdings and Oxdale Dairy Enterprise is finalized.

Brazil-based JBS in June announced its intent to purchase the two Australian businesses from QAF Limited, a Singapore-based food company. The proposed transaction is valued at AU$175 million (US$135 million).

ACCC stated in a press release it had concerns about the proposed transaction involving the two companies, but only offered specific concerns regarding the Rivalea Holdings deal.

“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.

The commission stated that if the acquisition proceeds, JBS would have a significant presence in pig farming, export accredited pig abattoirs and smallgoods through its Primo brand. ACCC stated that it was concerned that JBS, post-acquisition, may have the incentive to “frustrate service kills at that abattoir by increasing prices, offering less favorable terms or foreclosing access.”

ACCC also expressed worries that JBS may increase the price of fresh pork or reduce supply to competing smallgoods producers and pork wholesalers. ACCC also questions whether smallgoods producers and wholesalers’ reduced access to fresh pork or increased costs may also impact the retail supply.

“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,” Mr Keogh said

The ACCC believes the proposed acquisition is unlikely to raise horizontal overlap concerns in relation to the acquisition of slaughter weight pigs, supply of service kills or pork processing, as JBS and Rivalea do not compete closely.

When JBS initially announced its planned acquisition of Rivalea, it said the purchase of the business would allow JBS to increase its product diversification in Australia, and will increase the volumes of value-added products using pork within the Primo business. It is also expected to present new opportunities for domestic and export sales of pork.

Rivalea, according to JBS, accounts for about 26% of the hogs processed in Australia.

According to the Top Companies Database, JBS is the world’s largest protein supplier and the second largest food company. It also ranks first globally as a poultry producer, having slaughtered 4.04 billion broilers during the past year.

Par Roy Graber (16/09/2021)

Source :

Photo : Benjamin Ruiz (tirée de l'article original)