The Australian Competition and Consumer Commission today indicated it would not intervene in Bunge's proposed acquisition of Defiance Mills Limited's flour or bread operations. Bunge Cereal Foods Pty Ltd announced yesterday that it would be making a takeover offer for the flour milling and baking operations of Defiance Mills Limited. "Bunge approached the ACCC on a confidential basis about the proposed takeover approximately two weeks ago. Bunge sought the ACCC's preliminary view about the takeover under section 50 of the Trade Practices Act.
"The ACCC, drawing on its previous extensive knowledge of the flour milling and baking industries, concluded that the proposed acquisition was unlikely to lead to a substantial lessening of competition in either the flour or bread markets. "The main reason for this conclusion was that there is little overlap in the flour operations, and no overlap in the baking operations, of Bunge and Defiance. "The ACCC will be undertaking limited market enquiries into the manufacture and sale of premixes.
"Bunge submitted to the ACCC that the takeover will have a pro-competitive effect as it will create a 'third force' in milling and baking in Australia. Bunge claimed that if the takeover proceeds, the combined Bunge/Defiance will be able to compete more effectively with Goodman Fielder Limited and George Weston Foods Limited.
"The ACCC considered these submissions to be persuasive. "In considering flour and milling mergers and acquisitions in the past, the ACCC was concerned should industry rationalisation occur at the cost of higher prices to consumers, particularly in relation to products such as flour and bread.
"In reaching its decisions, the ACCC relied heavily on the views of industry participants, many of whom were very concerned about the proposed mergers and acquisitions and what effect they would have on prices.
"However, the proposed takeover by Bunge of Defiance, if successful, will demonstrate that industry rationalisation can occur without the risk of higher prices to consumers."
Further information Professor Allan Fels, Chairman, (03) 9290 1812 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808
"The ACCC, drawing on its previous extensive knowledge of the flour milling and baking industries, concluded that the proposed acquisition was unlikely to lead to a substantial lessening of competition in either the flour or bread markets. "The main reason for this conclusion was that there is little overlap in the flour operations, and no overlap in the baking operations, of Bunge and Defiance. "The ACCC will be undertaking limited market enquiries into the manufacture and sale of premixes.
"Bunge submitted to the ACCC that the takeover will have a pro-competitive effect as it will create a 'third force' in milling and baking in Australia. Bunge claimed that if the takeover proceeds, the combined Bunge/Defiance will be able to compete more effectively with Goodman Fielder Limited and George Weston Foods Limited.
"The ACCC considered these submissions to be persuasive. "In considering flour and milling mergers and acquisitions in the past, the ACCC was concerned should industry rationalisation occur at the cost of higher prices to consumers, particularly in relation to products such as flour and bread.
"In reaching its decisions, the ACCC relied heavily on the views of industry participants, many of whom were very concerned about the proposed mergers and acquisitions and what effect they would have on prices.
"However, the proposed takeover by Bunge of Defiance, if successful, will demonstrate that industry rationalisation can occur without the risk of higher prices to consumers."
Further information Professor Allan Fels, Chairman, (03) 9290 1812 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808