The proposed takeover of privately owned Oxford Cold Storage, the second biggest supplier of third party cold services in Victoria by Emergent Cold, the market’s third biggest player has come under scrutiny by The Australian Competition & Consumer Commission (ACCC).
Following a statement released this week the ACCC has raised preliminary competition concerns given, as it has stated, cold storage remains an integral part of the domestic and international supply chains for food products.
These include dairy, seafood, raw and cooked meat, poultry, frozen vegetables and other frozen or chilled foods.
“This acquisition would reduce the number of large Victorian suppliers from four to three,” ACCC Chair Rod Sims said.
“A significant number of customers have raised concerns with the ACCC about this deal. They consider Emergent Cold and Oxford to be each other’s closest competitors, as the companies provide similar services to similar customers.”
“The ACCC is concerned that losing the competition between Emergent Cold and Oxford in an already concentrated industry would result in higher prices and lower service levels,” Rod said
The combined Emergent Cold-Oxford would become the biggest supplier of third-party cold storage services in Victoria, controlling almost 40 per cent of total market capacity.
Market feedback indicates that the other main suppliers, Americold and NewCold, have limited spare capacity and business models that focus on supplying the largest customers.
The ACCC is seeking further information from market participants about the level of competition that would remain if the deal proceeds, as well as the ease and likelihood of entry by new operators.