GrainCorp Limited - XF Australia Pty Ltd

Summary

GrainCorp Limited (GrainCorp), through a subsidiary GrainCorp Commodity Management (Holdings) Pty Ltd, proposes to acquire 100% of the ordinary shares in XF Australia Limited (XFA), together with the following wholly owned subsidiaries:

• X F Enterprises (Australia) Pty Ltd (XFE);
• Performance Feeds Pty Ltd (Performance Feeds); and
• Nutrition Service Associates Pty Ltd (NSA).

GrainCorp is an agribusiness and processing company that manages a wide range of grains, pulses and oilseeds and produces edible oils, biofuel components and animal feeds, as well as oils and shortenings for the food production industry. GrainCorp has two animal feed supplement facilities in Queensland and a toll processing agreement in Victoria.

XFA is an animal feed supplement and nutritional consulting business. XFA supplies animal feed supplements through Performance Feeds, trace mineral premixes for animal feed supplement manufacturers through XFE and feedlot nutritional consulting services through NSA. XFA has four animal feed facilities across Victoria and Queensland.

Market definition

The ACCC considered the effect of the proposed acquisition in markets for:

1. The supply of animal feed supplements in regional markets across the east coast of Australia.
2. The supply and distribution of molasses centred around the sugar mills.

It was not necessary for the ACCC to form a concluded view in relation to the precise scope of these markets.

Competition analysis

The ACCC concluded that the proposed acquisition is not likely to substantially lessen competition in any market in Australia.

GrainCorp and XFA overlap in the supply of animal feed supplements across the east coast of Australia. XFA’s removal is unlikely to result in a material change to the degree of existing competition as the merged entity will still face significant competition from other animal feed supplement suppliers such as Bundaberg Molasses and Riverina.

The ACCC found that the proposed acquisition is unlikely to provide GrainCorp with the ability or incentive to restrict sale of molasses to other third-party distributors and competing producers of animal feed supplements. The ACCC notes that the parties do not compete in the supply and distribution of molasses. Whilst both GrainCorp and XFA acquire molasses, GrainCorp on-sells surplus amounts of molasses to third parties, XFA does not resell molasses to third parties. The ACCC considered that competing animal feed supplement suppliers will still be able to obtain molasses supply directly from sugar mills, distributors and other re-sellers.