Constellation Brands Inc and Australian Vintage Limited - possible merger
Type of assessment
Informal Review
Reference
40061
Acquirer(s)
Constellation Brands Inc
Target(s)
Australian Vintage Limited
Industry
Wine
Summary
At the time of the ACCC's review, Constellation Brands, Inc (CBI) and Australian Vintage Limited (AVL) were in discussions regarding a possible merger whereby certain of CBI's Australian and UK wine operations would be combined with AVL in exchange for a non-controlling 50% equity interest in the merged entity.
Outcome of assessment
Not opposed
Total review days *
32
Commenced public review
15th December 2009
Date completed
23rd February 2010
Market definition
The ACCC considered the possible merger in the context of the following markets:
- regional markets for the acquisition of wine grapes;
- a national market for the production and wholesale supply of bottled wine; and
- a national market for the production and wholesale supply of cask wine.
Competition analysis
Wine grapes
The ACCC formed the view that the possible merger is unlikely to substantially lessen competition in the relevant acquisition markets for wine grapes.
The ACCC recognised the current and forecast oversupply of wine grapes and wine in Australia, which, in conjunction with long-term contracts between some growers and wineries, limit switching options for growers in the foreseeable future.
While the merged firm would account for a large proportion of purchases from independent growers in some regions, the possible merger would not result in significant aggregation of such purchases, since AVL's purchases of grapes from independent growers are in decline.
Moreover, the ACCC considered that once overall supply and demand balance has been restored, the presence of alternative purchasers in all regions with the ability to expand their production facilities and grape purchases would provide a competitive constraint on the merged firm in the acquisition of wine grapes.
Wine
The ACCC formed the view that the possible merger is unlikely to substantially lessen competition in the relevant wine supply markets.
There would remain a number of large and mid-sized alternative suppliers of branded and private label bottled and cask wine, with excess production capacity and an ability to expand.
Review timeline
Date
Event
15th December 2009
ACCC commenced review under the Merger Review Process Guidelines.
11th January 2010
ACCC requested further information from the merger parties. ACCC timeline suspended.
13th January 2010
Closing date for submissions from interested parties.
18th January 2010
ACCC received further information from the merger parties. ACCC timeline recommenced.
19th January 2010
ACCC requested further information from the merger parties. ACCC timeline suspended.
25th January 2010
ACCC received further information from the merger parties. ACCC timeline recommenced.
3rd February 2010
Former proposed date for announcement of ACCC's findings. Decision delayed to allow the ACCC to conduct further inquiries.
4th February 2010
ACCC requested further information from the merger parties. ACCC timeline suspended.
12th February 2010
ACCC received further information from the merger parties. ACCC timeline recommenced.
23rd February 2010
ACCC announced it would not oppose the possible merger.
* Total Review days = Total business days less public holidays and time during which the review was suspended.
