ACCC approval for Baiada-Bartter deal sees new chicken leader created

Posted by Daniel Palmer on 1st July 2009

The Australian Competition and Consumer Commission has given the all clear for Baiada Poultry to purchase the owner of the Steggles brand (Bartter) in a deal that will create a new market leader in the chicken processing industry.

The ACCC initially outlined a decision to oppose the combination of Australia’s second and third largest chicken processors but have now been satisfied by a commitment by Baiada to sell Bartter’s Victorian assets to La Ionica Poultry.

“On February 11 2009, the ACCC announced its opposition to the proposed acquisition of Bartter by Baiada because it would have the effect of substantially lessening competition in the market for the wholesale supply of processed chicken, in breach of the Trade Practices Act 1974,” ACCC Chairman, Graeme Samuel, noted. “The ACCC decided that the three national chicken processors – Baiada, Bartter and Ingham – supply the vast majority of customers who buy very large volumes of processed chicken (such as supermarkets and fast food restaurants) and are each other’s closest competitors.”

“The ACCC also concluded that smaller chicken processors faced high barriers to expansion and as such were unlikely to be able to impose effective competitive constraints on the merged entity.”

To address the ACCC’s competition concerns, Baiada, upon acquiring Bartter, will divest all assets currently owned by Bartter in Victoria to La Ionica Poultry.

Bartter’s Geelong processing plant, associated breeding farms and hatcheries and Bartter’s North Melbourne feed mill are among the assets to be sold.

The ACCC has accepted the undertaking on the basis that the divestiture of Bartter’s Victorian assets to La Ionica Poultry will result in a significant expansion of La Ionica Poultry’s current chicken processing capabilities and a stronger competitor to Ingham and Baiada.

“The ACCC is satisfied that the proposed acquisition of Bartter by Baiada, after taking account of the court enforceable undertaking, is now unlikely to substantially lessen competition,” Mr Samuel advised.

Bartter Enterprises, the owner of the Steggles brand and employer of over 4,500, is the second largest producer and marketer of chicken and turkey products in Australia. Inghams – with over 7,000 employees – is the largest, with Baiada currently the third largest. Together, the three companies hold around 65 per cent of the Australian market.