The proposed takeover of private owned Oxford Cold Storage, the second biggest supplier of third party cold services in Victoria by Emergent Cold, the market's third biggest player has come under scrutiny by The Australian Competition & Consumer Commission (ACCC).
Following a statement of issues released this week the ACCC has raised preliminary competition concerns given, as it has stated, cold storage remains an integral part of the domestic and international supply chains for food products.
These include dairy, seafood, raw and cooked meat, poultry, frozen vegetables and other frozen or chilled foods.
ACCC Chair Rod Sims said the acquisition would reduce the number of large Victorian suppliers from four to three.
“A significant number of customers have raised concerns with the ACCC about this deal. They consider Emergent Cold and Oxford to be each other’s closest competitors, as the companies provide similar services to similar customers,” he said in a statement.
“The ACCC is concerned that losing the competition between Emergent Cold and Oxford in an already concentrated industry would result in higher prices and lower service levels.”
Combined Emergent Cold-Oxford would control almost 40 per cent of total market capacity, making it the biggest supplier of third-party cold storage services in Victoria.
Market feedback indicates that the other main suppliers, Americold and NewCold, have limited spare capacity and business models that focus on supplying the largest customers.
The ACCC said it was seeking further information from market participants about the level of competition that would remain if the deal proceeds, as well as the ease and likelihood of entry by new operators.
The ACCC has invited submissions from interested parties by 30 August 2019.
Emergent Cold, a wholly owned subsidiary of US-based Emergent Cold LP, entered the Australian market in late 2017, through its acquisition of the cold storage business of John Swire & Sons, Swire Cold Storage.
It expanded in late 2018 by acquiring Montague Cold Storage.
Oxford is a privately owned operator of a large cold storage facility in Laverton North, Victoria.
The ACCC’s final decision is scheduled for 7 November 2019.
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