Competition bureau finds 'substantial' anti-competitive effects with proposed Bunge-Viterra merger

The proposed merger of agricultural giants Viterra and Bunge is raising competition concerns from the federal government.

A recent report from Canada’s Competition Bureau concluded that Bunge Ltd's $8.2 billion acquistion of Viterra is “likely to result in substantial anti-competitive effects and a significant loss of rivalry” in a number of grain and canola oil markets across Canada.

The bureau pointed to Bunge’s ability to “materially influence the economic behaviour” of G3 Global Holdings – a major competitor to Viterra.

“As a minority shareholder of G3, Bunge has access to G3’s confidential competitively sensitive information,” the report read. “Provid[ing] a channel through which G3’s largest competitor [Viterra] has the ability to access information about G3’s economic and competitive strategies.”

As a result of the proposed merger, the bureau expects a substantial lessening of competition for the purchase of canola between Bunge and Viterra in certain western Canadian markets. The report highlighted the Nipawin, Sask. and Altona, Man. areas where the companies’ market share exceeded 45 per cent and 60 per cent respectively.

“The Proposed Transaction will result in the combination of the company with the most oilseed crushing facilities and the company with the most primary grain elevators in Western Canada,” the report read.

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Both G3 and Viterra hold a combined share of 42 per cent of elevator capacity in western Canada.

Additionally, the bureau forecasts anti-competitive effects to the sale of canola oil in eastern Canada to customers who cannot receive oil by rail.

In their analysis, the Commissioner of Competition outlined that an exercise of market power by a merged Viterra-Bunge could not be constrained by competitors. The merger would also pose challenges for other companies looking to enter the market.

“Potential entrants face challenges including limited availability of appropriate sites for an elevator, access to transportation networks to move the grain onward, and high capital costs,” the report read.

The bureau’s assessment included analysis of millions of records, interviews with more than 70 stakeholders and two independent experts specializing in empirical economics and corporate governance.

Bunge’s acquisition of Viterra was first proposed to the Ministry of Transport in August of 2023.

In September, the ministry decided that the proposed merger raised public interest issues related to national transportation. It directed Transport Canada to begin a public interest assessment.

The assessment must be concluded and provided to the Transport Minister by June 2, 2024.

APAS concerned

The Agricultural Producers Association of Saskatchewan (APAS) said the bureau’s report validated the organization’s longstanding concerns.

“This merger will make it harder for grain producers to be successful,” APAS President Ian Boxall said in a news release Tuesday.

“When you boil it down, it feels like farmers will be the ones subsidizing these huge grain companies if this merger is approved. With less competition, grain companies hold more of the cards—more one-sided, take-it-or-leave it grain contracts, fewer delivery options, lower prices, and less supply chain transparency and data.”

In its message, APAS urged regulatory bodies and the federal government to consider the lasting impact of the proposed merger.

“Our priority remains the well-being and profitability of Saskatchewan and Canadian farmers,” Boxall added. “We seek assurance that their interests will be safeguarded in the face of this proposed monumental industry change.”

In the 2022-2023 crop year, producers grew over 90 million tonnes of grain across the country.

'Misplaced' concerns

Bunge and Viterra issued a joint statement Tuesday – minimizing the effect of the Competition Bureau’s non-binding advisory report.

“It identifies localized concerns relating to the purchase of canola in the Nipawin, SK and Altona, MB areas, and related to canola oil sales to a small segment of customers in Eastern Canada. It also notes a potential concern regarding Bunge’s minority stake in G3 Canada,” the statement read.

“We believe the noted concerns are misplaced and look forward to working with Transport Canada and the Bureau to provide further information addressing these points.”

The two companies said they are confident the transaction will lead to considerable benefits to Canada and fully expect the deal to close in mid-2024 once the remaining regulatory steps – which includes the Canada Transportation Act approval – are obtained.

Bunge Ltd. is a global agribusiness and food company headquartered in St. Louis, Missouri. Originally incorporated in Switzerland, the company boasts 23,000 employees across 300 facilities in 40 countries.

Viterra is an international agribusiness that was formed in 2007 when the Saskatchewan Wheat Pool merged with Agricore United. Headquartered in Regina, the company of 16,000 workers handles and markets grain, along with other agricultural products across 37 countries.