The Australian Competition and Consumer Commission will not oppose the proposed acquisition of Bartter by Baiada Poultry after competition concerns were resolved by Baiada's undertaking to sell certain Victorian assets to competitor La Ionica Poultry.
ACCC chairman Graeme Samuel says the watchdog had opposed the acquisition of Bartter by Baiada because it would have substantially lessened competition in the market for the wholesale supply of processed chicken.
"The ACCC decided that the three national chicken processors – Baiada, Bartter and Ingham – supply the vast majority of customers who buy very large volumes of processed chicken (such as supermarkets and fast food restaurants) and are each other's closest competitors," Mr Samuel said.
"The ACCC also concluded that smaller chicken processors faced high barriers to expansion and as such were unlikely to be able to impose effective competitive constraints on the merged entity."
To address the ACCC's competition concerns, Baiada offered a court enforceable undertaking under section 87B of the Act.
Under this, Baiada, upon acquiring Bartter, will simultaneously divest all assets currently owned by Bartter in Victoria to La Ionica Poultry.
"These assets include Bartter's Geelong processing plant, associated breeding farms and hatcheries and Bartter's North Melbourne feed mill," Mr Samuel said.
La Ionica currently operates a chicken processing facility in Thomastown and is a major supplier of whole dressed birds to customers, predominantly in Victoria and to a lesser extent in New South Wales.
The ACCC has accepted the undertaking on the basis that the divestiture of Bartter's Victorian assets to La Ionica Poultry will result in a significant expansion of La Ionica Poultry's current chicken processing capabilities.
After conducting market inquiries, the ACCC decided that La Ionica Poultry's expansion will provide large volume buyers of processed chicken with an alternative supplier and will therefore offer increased competitive constraints to the merged entity.
"The ACCC is satisfied that the proposed acquisition of Bartter by Baiada, after taking account of the court enforceable undertaking, is now unlikely to substantially lessen competition," Mr Samuel said.
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