GPA: GROWERS TO REMAIN CAUTIOUS ON ELDERS TAKEOVER

Grain Producers Australia notes today’s decision by the Australian Competition and Consumer Commission’s (ACCC) of conditional approval being granted to Elders Limited’s takeover of Delta Agribusiness, requiring divestment of Delta stores, only in WA.

In May this year, GPA HERE acknowledged the ACCC’s announcement of preliminary concerns about the proposed takeover, in a published ‘Statement of Issues’ paper. This came after the competition watchdog delayed its originally scheduled date to announce provisional findings of its decision on the proposed take-over, to allow more time to seek further information, from the merger parties, in its review analysis.

In January this year, GPA submitted to the ACCC’s review process, opposing the proposed take-over. The ACCC’s preliminary view – that the proposed acquisition would likely substantially lessen competition in retail supply of rural merchandise and related agronomy services in certain local markets – reflected GPA’s strong concerns.

Today, the ACCC announced HERE it wouldn’t oppose the proposed acquisition, ‘after accepting a court-enforceable undertaking that commits Elders to divest six Delta stores in Western Australia’.

To address concerns about diminished competition and impacts of farmers, ‘Elders has undertaken to divest six Delta stores in Western Australia, and the ACCC has accepted their undertaking’, the ACCC’s statement said.

GPA Southern Region Director, Andrew Weidemann, said he was disappointed the ACCC had not realised all of the concerns expressed by growers, in GPA’s submission, about the Elders takeover reducing competition in 33 regional locations/communities.

However, he said the ACCC’s approval conditions partly recognised concerns raised by GPA about the creeping agenda of reduced supply chain competition, and its negative impacts on productivity of Australian grain producers; especially essential farm input costs, already at record high prices.

“We will examine the details of this decision closely to further understand the ACCC’s reasoning, in making this final determination,” he said.

“In particular, how it considered and responded to the serious concerns raised by GPA’s State Members, on behalf of their local farmer members, about localised impacts, in their communities.

“Now the merger has been given the green-light, we’ll continue to monitor this situation closely to ensure the productivity and interests of grain producers are protected from any anti-competitive behaviour. Especially the price and supply of essential inputs to farmers in other States, outside of WA, where Elders has not been required to divest Delta stores, as a condition of the ACCC’s final approval.”

Mr Weidemann said GPA’s submission to the ACCC’s review process had raised genuine concerns about the proposed take-over substantially lessening competition in localised retail markets for rural supplies, and wholesale supply market for key cropping inputs such as crop protection chemicals, fertilisers and seed.

However, he recognised the market would also quickly determine any specific issues in local areas, given big companies can also create new opportunities, as growers turn to alternative private options and choices.”

ACCC Decision

“Our review closely considered the likely effect of the proposed acquisition on competition in each local area where both Elders and Delta have a retail store, taking into account the specifics of each local area,” ACCC Deputy Chair Mick Keogh said.

"We examined the strength of competing retailers, the particular geographic features and size and type of farms, among other factors. We also engaged with a range of stakeholders including farmers, competing retailers, wholesale suppliers, buying groups and industry bodies as part of our review."

“The nature of competition in the retail supply of rural merchandise is more localised than is the case in other retail sectors, partly due to the differences in farming in different local areas, and the importance of local relationships,” Mr Keogh said.

“Following an in-depth review, we were concerned that the proposed acquisition would be likely to substantially lessen competition in several local areas in Western Australia.”

To address these concerns, Elders has undertaken to divest six Delta stores in Western Australia, and the ACCC has accepted their undertaking.

The ACCC considered, and has approved, Independent Rural Pty Ltd as the purchaser for Delta stores in Dalwallinu and Kalannie, and E. E. Muir & Sons Pty Limited (Muirs) as the purchaser for Delta stores in Albany, Hyden, Manypeaks and Wellstead.

“The ACCC considers that the undertaking provided by Elders addresses the competition concerns that would otherwise arise from the proposed acquisition. Independent Rural’s and Muirs’ acquisition of Delta stores in each of these local areas will create a strong, independent and viable long-term competitor to Elders in those six areas,” Mr Keogh said.

The ACCC concluded that the proposed acquisition is unlikely to substantially lessen competition in the retail supply of rural merchandise in other local areas where both Elders and Delta own retail stores.

ENDS