Australia-based potato business Mitolo can proceed with its acquisition of Thomas Foods International (TFI)’s potato arm after the deal was okayed by the country’s competition watchdog.
The deal was called in by the The Australian Competition and Consumer Commission (ACCC) after fears that an entity would be created that enjoyed a market monopoly but the all-clear has now been given.
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Mitolo is a potato and onion growing wholesale supply business operating packing sheds in South Australia and New South Wales. It supplies fresh washed and brushed potatoes to retailers and wholesalers.
The TFI potato business also grows potatoes and operate packing sheds in South Australia and there is overlap in the acquisition of some potatoes from third party growers in the state and the supply of potatoes.
But ACCC deputy chair Mick Keogh said in a statement: “The ACCC closely examined the effect of Mitolo’s acquisition of TFI on South Australian potato growers, rival packing sheds, and retail and wholesale customers of the parties.
“The decline in consumer demand for potatoes has created difficult circumstances for potato growers, which will continue to affect growers regardless of the transaction.
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By GlobalData“However, feedback from potato growers and other industry participants suggested that if Mitolo sought to lower prices it paid growers, most growers would be able to switch to rival packing sheds, and some would be able to swap to growing potatoes for processing into potato products.”
The ACCC also determined that rival packing sheds would continue to provide a viable alternative source of supply for retail and wholesale customers, if Mitolo tried to increase potato prices or decrease quality.
The ACCC lastly considered whether Mitolo’s acquisition of potato varieties currently held by the TFI potato business would affect competition for registered potato variety licenses.
“We concluded that growers and packing sheds will continue to be able to access a range of other varieties as well as future varieties that are being developed, allowing them to compete with Mitolo both now and in the future,” Keogh said.
TFI established in 1988, primarily operates as a meat packing business.
It has operated the potato business since July 2013 when it acquired the fresh washed potato business of Mondello Farms.
In May, TFI announced it had snapped up a stake in Frew, a lamb- and goat-processing peer in its domestic market.
