Dive Brief:
- Bunge's proposed acquisition of fellow grain trader Viterra raises red flags in Canada for the potential to harm competition in some of the country's agricultural markets.
- Canada's Competition Bureau said Tuesday that the $8.2 billion deal is "likely to result in substantial anti-competitive effects," including the potential to harm grain purchasing in Western Canada, as well as canola oil sales in Eastern Canada.
- Bunge and Viterra said in a joint statement that the bureau's "concerns are misplaced" and that they will work with authorities to address the flagged issues. The companies expect the transaction to close in mid-2024 once it obtains the required regulatory approvals.
Dive Insight:
Bunge's potential merger with Viterra would create a grain trading giant similar in size to rivals Cargill and Archer-Daniels-Midland Co. Bunge and Viterra are two of Canada's largest canola buyers, and officials warn that the loss of competition could bring decreased prices for farmers in certain markets.
"The Proposed Transaction is likely to result in a substantial lessening of competition for the sale of refined canola oils in Eastern Canada to customers who cannot receive oil by rail," the competition bureau said in its report, "and will increase Bunge’s ability to fully or partially foreclose its rivals in the market for the distribution and further-processing of these canola oil products."
Authorities also raised concerns about Bunge's minority stake in G3 Global Holdings, considered a major competitor to Viterra. As a shareholder, Bunge has access to sensitive information belonging to G3 and has the ability to influence the company's economic behavior, according to the bureau.
The competition report is non-binding, and the two companies can propose measures to address raised concerns. Canada's transport ministry has until June 2 to review the deal, and the ultimate signoff will come from the government.
Bunge and Viterra noted that the report found competition impacts were localized in scope and pledged to address the bureau's concerns.
"We are pleased the regulatory process is advancing and are confident the transaction will yield considerable benefits to Canada," the companies said in their joint statement. "These will include stronger supply chains in uncertain global markets, maintaining Canadian leadership in agriculture and food by increasing capacity to invest, and employing thousands of Canadians in well-paying jobs.”
