By Selina Green
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The Australian Competition and Consumer Commission (ACCC) has approved Elders Limited’s proposed multi-million dollar acquisition of Delta Agribusiness.
Elders and Delta are two of the biggest agribusiness companies in Australia, providing chemicals, seed, fertiliser, animal products and agronomy services to farmers.
Valued at $1.37 billion, Elders runs 245 retail stores across the country, while Delta owns 68 stores in New South Wales, Victoria, South Australia and Western Australia.
Elders revealed its plans to purchase Delta for $475 million in November last year.
The ACCC announced today that it would not oppose the purchase, on the condition that several stores in WA be sold.
“Other than taking [WA] into consideration, we don’t think there would be a substantial lessening of competition as a result of the transaction,” deputy chair of the ACCC Mick Keogh said.
Six WA Delta stores to be sold
The ACCC spent months examining the sale, and its decision was delayed after several farm groups raised concerns about the deal.
Mr Keogh said there was “quite a lot to consider.”
The ACCC had particular concerns in parts of Western Australia where “there weren’t much in the way of alternatives available”, Mr Keogh said.
Elders has accepted a legal undertaking to sell six Delta stores in Dalwallinu, Kalannie, Albany, Hyden, Manypeaks and Wellstead in WA to independent buyers.
Earlier this year, the ACCC flagged concerns about reduced competition in other parts of the country, but Mr Keogh said it was now comfortable about those.
“We’re reasonably confident that in most of the locations or virtually all of the locations that we looked at in NSW and Victoria, there was a strong alternative competition available,” Mr Keogh said.
Elders and Delta businesses will be kept separate
Elders’ managing director, Mark Allison, said the sale was set to be completed on November 3.
He denied farmers’ concerns that the company would have too much power in the market.
“If you look across Australia, there are 1,800 rural service branches, and so the belief or the thought that there was some sort of monopoly situation is really nonsense,” Mr Allison said.
“This is a highly competitive, localised market with multiple service providers.”
Mr Allison said Elders would continue to operate the two businesses separately.
“All the Delta branches remain Delta branches,” he said.
“There’s no influence from Elders. They run as a standalone and the Elders run as a standalone and really nothing changes.”
Farmers’ concerns remain
The vice president of NSW Farmers, Rebecca Reardon, said the ACCC’s decision was disappointing.
“We already know there’s quite a concentration within NSW when it comes to rural merchandising, especially after Nutrien and Ruralco came together,” Ms Reardon said.
Nutrien is the largest retail supplier of rural merchandise in Australia with a national footprint of over 380 stores.
Elders is the second biggest, but it is getting close to Nutrien, with a total of 304 stores when the acquisition is complete.
“Take somewhere like Trangie. They only have a Delta and an Elders. So why were they allowed to keep both stores in that town?”
Ouyen in north west Victoria is another town with Elders and Delta stores.
But local farmer Leonard Vallance said there were two other agribusinesses in the area, so that helped keep sales competitive.
“Farmers will always source product from other alternatives, so I don’t think we’re going to get down to a duopoly in the town of Ouyen just yet,” Mr Vallance said.
Mr Vallance said he was concerned new businesses wanting to join the agribusiness space faced a raft of challenges.
“The bureaucracy in government attached to starting up a business and permits and building permits and every other thing that gets in your way, employing labour, it’s very difficult,” he said.