CANADA'S Competition Bureau said it is not going to block two major mergers in western Canadian hog production and will permit the purchases to go ahead.
The Competition Bureau said it would take no further action on Olymel's proposed purchase of the operations of Big Sky Farms Inc., western Canada's largest independent hog producer. Big Sky was in receivership last fall when the buyout was announced. It has hog breeding and growing operations in Saskatchewan and Manitoba. Olymel operates a pork processing plant in Alberta.
The federal enforcement agency made the same "no action" determination for Maple Leaf Foods Inc. to purchase the Puratone Corp. hog operations. Puratone is western Canada's second-largest independent hog producer, with production operations located in Manitoba. Maple Leaf operates processing plants in Alberta and Manitoba.
"The bureau issued a no action letter to Olymel on Nov. 27, 2012, and to Maple Leaf on Dec. 6, 2012," the Competition Bureau said Dec. 17.
The agency explained that, in its review, officials looked at "whether post-transaction Olymel or Maple Leaf would have the ability and incentive to totally or partially foreclose rivals' access to live hogs in upstream markets (input foreclosure) or to limit or cease their purchases of live hogs from upstream rivals (customer foreclosure) and, if so, whether such ability and incentive would likely result in a substantial lessening or prevention of competition.
"In both investigations, the bureau concluded that the mergers were unlikely to lead to a substantial lessening or prevention of competition for a number of reasons, including the inability to create or increase market power upstream due to an excess demand for hogs and the inability to create or increase market power downstream due to, among other factors, effective remaining competition," the Competition Bureau concluded.