According to R-CALF USA, it’s Australian sister organization, the Australian Beef Association (ABA), has submitted comments to the Australian Competition and Consumer Commission (ACCC) protesting the proposed acquisition of Rockdale Beef (Rockdale) by JBS Swift (JBS).

 In its comments, according to R-CALF USA, ABA states that in just three years, JBS has gone from being a non-existent factor in Australia’s beef-killing market to the No. 1 beef packer, processing 25 percent of Australia’s cattle. ABA cites that the acquisition of Rockdale would increase JBS’ market hold to 27 percent, and the group is concerned that if JBS continues to grow at its current rate, it will control over 50 percent of the beef kill by 2013.

 “We believe that this is the time to question the breakneck speed of JBS’ growth and how far JBS is to be allowed to go,” said ABA Chairman Brad Bellinger. “We are very aware of the precarious state of many Australian processors who do not have access to the extremely low interest loans that the Brazilian Development Bank grants to JBS.”

 The ABA comments point out several concerns. For example, if the Rockdale feedlot – a key site – were merged with the existing JBS feedlots at Griffith and Barraboi, a combined capacity of 110,000 head in the Riverina and Northern Victoria would exert considerable buying power for not only feeder cattle but also feed grains in one of Australia’s prominent grain-growing areas. JBS also would have the added advantage of combining this market power with strategically located feedlots at Toowoomba, Mungindi and the Liverpool Plains. Current feedlot capacity of JBS is 110,000 head, and the purchase of Rockdale would increase this to 163,500 head.

 ABA is also concerned, according to R-CALF USA, about the high cost of road transport in Australia, which has made the geographical placement of meat processing, feedlot and grain growing areas even more important to the profitability of vertically integrated beef processing and feeding operations. If JBS/Swift were to merge with Rockdale, it would increase its current feedlot capacity from 110,000 to 163,000 head.

 “Allowing JBS to increase the capacity of its feedlot and processing facilities, as well as JBS’ geographical spread would increase market power of one entity, giving JBS an increased ability to set prices,” Bellinger said.

 Another important note included in ABA’s comments was the group’s concern about JBS’ history of engaging in anticompetitive practices.

 “Dow Jones Newswires reported in November 2007 that JBS SA Friboi Group was among a number of Brazilian companies which, after a 2 year investigation by the Brazilian Justice Department’s Anti-trust Division, were accused of engaging in anticompetitive practices,” the comments state. “JBS SA was reportedly charged with anticompetitive prices for coordinating price agreements among themselves in order to keep cattle prices low when purchasing livestock for slaughter. JBS denied the charges; however, in a subsequent news article, JBS SA reportedly agreed to pay $8.5 million to an antitrust fund as a result of the charges and agreed to end the practices that were allegedly anticompetitive.”

 “This example demonstrates that it is highly likely that the Australian feeder cattle market would be subject to coordinated interaction by JBS Brazil given that the company was reportedly accused and found culpable based on the payment of restitution,” commented Bellinger. “ABA is requesting that the ACCC thoroughly analyze this effort by JBS to acquire Rockdale Beef to determine the potential dangers to Australia’s beef industry.”