ACCC greenlights proposed acquisitions of interests in Glencore Agriculture

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The Australian Competition and Consumer Commission (ACCC) announced that it will not stand in the way of the proposed acquisitions of interest in Glencore Agriculture Limited, a company owned by Glencore plc.

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ACCC’s response relates to the offers made by the Canada Pension Plan Investment Board (CPPIB) and British Columbia Investment Management Corporation (bcIMC) for the acquisition of 40% and 9.99% interest in Glencore Agriculture, respectively.

“The ACCC conducted inquiries with customers, suppliers, and competitors. Based on these, the ACCC is of the view that neither of the proposed acquisitions would be likely to substantially lessen competition in any market,” ACCC Chairman Rod Sims said.

Both CPPIB and bcIMC have various interests in the grain supply chain and interests of 33% and 12% respectively in the rail operator Pacific National. Glencore Agriculture has a strong position in the supply of upcountry grain storage and handling, and bulk grain port terminal services in South Australia.

The ACCC assessed whether common interests in Glencore Agriculture and Pacific National would adversely impact the ability of rivals in rail or grain to compete.

“The ACCC does not consider that the acquisition gives Glencore Agriculture the incentive to use its position in the grain supply chain in South Australia to adversely affect Pacific National’s rivals. The nature of the minority interests and the fact that Pacific National does not provide grain rail haulage services in South Australia were important considerations. Furthermore, the incumbent rail company, Genesee & Wyoming, is the dominant provider of grain rail haulage in South Australia and owns most of the relevant below-rail network,” Mr Sims said.

“The ACCC also considered whether CPPIB and bcIMC could use their influence over Pacific National, which is the main provider of grain rail haulage in NSW and Victoria, to foreclose Glencore Agriculture’s rivals. However, the nature of the minority interests involved, and the market position of other grain logistics providers and traders, such as GrainCorp, make it unlikely CPPIB and bcIMC would have the ability or the incentive to engage in such a strategy.”

According to Mr Sims, the ACCC also investigated whether the cross-ownership interests would see related entities share commercially sensitive information to the detriment of competition.

“There are several constraints on the two proposed shareholders’ abilities to share Glencore Agriculture’s commercially sensitive information. Further, Glencore plc will retain majority ownership of Glencore Agriculture and has a commercial incentive to prevent such disclosure,” Mr Sims concluded.