Canada’s Competition Bureau has raised “serious competition concerns” about Bunge’s proposed acquisition of Viterra.
of USD 8.1 billion deal announced in June 2023 It is likely to have a negative impact on competition for canola grown near Bunge’s crushing plants in western Canada, as well as on the supply of refined canola oil in eastern Canada, the company said. Report issued by the secretariat April 22nd.
The report does not include a ruling, but will be used to inform Transport Canada’s broader review of the deal.
The competition watchdog also expressed concern about Bunge’s significant influence over the actions of Viterra’s competitor G3 Global Holdings, in which Bunge holds a 25% stake.
The main concern raised in the report is that the deal will put downward pressure on canola prices in the areas around Bunge’s canola mills in Nipawin, South Carolina, and Altona, Man. (Photo above)
“Given the volume of purchases in these regions, the annual loss loss due to these price effects is likely to be $7 million to $9 million in the Altona region and $8 million to $10 million in the Nipawin region.” The secretariat stated. .
According to the agency, of the 341 grain elevators licensed in Western Canada, Vitera operates 65 and G3 operates 19, which is about a quarter of the total elevator capacity in Western Canada. It is said to be equivalent to one third. Bunge also owns four of the 11 canola crushing facilities in Western Canada, while Viterra owns one and has plans to build a large-scale crushing facility in Regina, Sask. .
The report says there is evidence that G3 and Viterra are competing for all of G3’s 19 elevators in Western Canada.
“Through its significant interest in G3, Bunge can continue to influence G3’s competitive strategy. If Bunge acquires the assets of Viterra, G3’s largest competitor, Bunge will be able to leverage G3’s competitiveness. They will have significant incentives to decline over time,” the report states.
The report was submitted to Transport Minister Pablo Rodríguez, as Transport Canada has until June 2nd to submit the report. Public interest review of transactions. The federal cabinet will then have to decide whether to allow or require changes to the deal, based on advice from the transport minister.
In response to the Competition Bureau’s report, Bunge and Vitella said they believe concerns are “misplaced” and look forward to working with Transport Canada and the Competition Bureau to provide further information. Stated.
The companies said they are “pleased with progress in the regulatory process and believe this transaction will bring significant benefits to Canada.”
Bunge and Viterra said they still expect the transaction to close in mid-2024, pending all regulatory approvals.
Seventy percent of farmers surveyed by RealAgristudies last July said they did not think the agreement should be allowed to proceed.
Related:
Bunge expected to downplay G3 stock amid questions over merger with Viterra
