The Australian Competition and Consumer Commission (ACCC) today announced that it will not oppose the proposed acquisition of Australian Peanut Industries (API) by Peanut Company of Australia (PCA). The decision follows an extensive inquiry into the likely effect on competition arising from the acquisition.
PCA and API purchase unprocessed peanuts from Australian growers, and then sell the shelled and processed peanuts to end-users such as manufacturers of peanut butter and snack foods. The acquisition of API therefore has the potential to impact upon the farmers who sell peanuts for processing, as well as the market for processed peanuts.
"PCA is already the major buyer of Australian unprocessed peanuts, due, in part, to its history as the Peanut Marketing Board. However, inquiries indicate that the acquisition may not substantially increase PCA's market share, as all processors have recently invested in upgrading their processing facilities such that there is currently excess capacity in the industry", ACCC Chairman, Professor Allan Fels, said today.
"A number of other processors will continue to operate in the market and it is likely that they will be keen to secure additional peanuts to ensure their blanching facility continues to operate at high utilisation levels.
"Furthermore, the excess capacity has created some uncertainty as to the long-term viability of API as a separate entity. API is part of Jorgensen Waring Foods (JWF), which has been on the market for some time.
"In respect of the market for processed peanuts, it also appears unlikely that PCA's acquisition of API will have a substantial impact on competition. The industry trend is for the vast majority of peanuts to be sold as a blanched product. This acquisition does not involve a stake in the blanching facility owned by the independent shellers.
"Another dynamic in the industry is the threat of additional imports, which may increasingly constrain PCA and its competitors from raising prices for shelled and processed peanuts.
"The ACCC therefore decided that the acquisition of API by PCA was unlikely to result in a substantial lessening of competition in any market, and thus would not result in a breach of section 50 of the Trade Practices Act 1974.