Hockey approves JBS’s $1.4 billion takeover of Primo

Brazil’s JBS has been given approval to acquire Primo

The ABC and others report that treasurer Joe Hockey approved
the $1.4 billion sale to JBS’s US subsidiary, with conditions that contact
processors retain access to Primo (Australian Consolidated Food Holdings).

Under the conditions, JBS must ensure:

– “the Scone abattoir in NSW
must remain open and retain its capacity for consignment killings accessible by
third parties

– JBS reports
to the Foreign Investment Review Board (FIRB) on its compliance every six
months, and

– the
transaction be reviewed in three years.”

Primo’s operations include five pig processing plants in Australia and New Zealand and about 3,000 employees.

Dow Jones reports that JBS will benefit from an Australian
reputation for premium farm produce. It comes after last year’s China-Australia free trade agreement was reached, from which Primo would benefit through lowered
tariffs for imported smallgoods.

The announcement came after the ACCC last month said it
would not oppose the sale, as it would not substantially reduce competition in
the beef processing sector.

Nationals Senator John Williams said this was evidence that
competition laws were not doing their job against “creeping acquisitions”, he told the ABC.

“If you just go along buying one company, then another
company, then another company, taking small steps, that’s OK by the law,” he

“We need to change the law so that cannot happen
because we’re going to end up having two or three companies running this
nation, which would be a disaster.”

His concerns about reduced competition were highlighted by NSW
Farmers Cattle Committee chairman Derek Schoen, who said that JBS and
Primo were direct competitors, and prices for farmers would be pushed down.

“The acquisition of Primo by JBS will (make it) incredibly
difficult for any new entrants to enter the market,” Farm Weekly reports him as saying.