The Competition Bureau has poured cold water on the proposed $46.6 billion merger between US agricultural giant Bunge and Regina-based Viterra, throwing a potential roadblock on one of the largest tie-ups in Canadian history.On Tuesday, the bureau released a report to the Ministry of Transport suggesting the deal would reduce competition in canola markets and impact the transportation and sale of 90 million tonnes of wheat, canola, soybeans, barley, corn, oats and rye to grain elevators in Western Canada.The bureau further determined that the deal is ”likely to harm competition” in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada that don’t have rail access to those products..“The Competition Bureau has concluded that the proposed acquisition… is likely to result in substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada,” in Canada.Bunge is one of the largest grain merchants in the US while Viterra is the successor company to farmer cooperatives including the Saskatchewan Wheat Pool.Viterra is one of Saskatchewan’s largest employers with more than 18,000 people worldwide.The proposal would result in the merger of two of Canada's largest canola purchasers, with Bunge operating the largest number of oilseed crushing facilities in Canada and Viterra operating two crushing facilities and the largest number of grain elevators on the prairies.When the deal was announced last summer they said the combined company would allow it to compete with global rivals Archer-Daniel’s-Midland and Cargill..“Following Bunge’s merger with Viterra, the potential for competitive harm resulting from this access to confidential information will be greatly amplified given Viterra and G3 compete in a number of markets in the agricultural supply chain in Canada,”Competition Bureau report.The kicker is that Bunge is already a minority shareholder in another Canadian grain company called G3, which also holds “significant” grain and terminal elevator assets in Canada.G3 was founded in 2015 as a joint venture between Bunge and the Saudi Agricultural and Livestock Investment Company to develop new grain handling and export infrastructure in Canada, including the construction of a new grain terminal facility in Vancouver. G3 operates 20 grain elevators in Canada, as well as terminal elevators at ports in BC, Ontario, and Quebec.That also raised red flags because the combined Viterra company would have access to G3’s economic and competitive strategies in Canada through Bunge’s minority interest which would “result in harm to competition because of Bunge’s ability to materially influence Viterra’s rival G3.”“Following Bunge’s merger with Viterra, the potential for competitive harm resulting from this access to confidential information will be greatly amplified given Viterra and G3 compete in a number of markets in the agricultural supply chain in Canada,” it said.Transport Canada has until June 2 to review the report and make recommendations to minister Pablo Rodriguez, who will then take them to cabinet for a final decision.According to an emailed statement from Bunge, the companies are confident they can overcome the concerns.“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,” it said.“We are pleased the regulatory process is advancing and are confident the transaction will yield considerable benefits to Canada. These will include stronger supply chains in uncertain global markets, maintaining Canadian leadership in agriculture and food by increasing capacity to invest, and employing thousands of Canadians in well-paying jobs.”Once the remaining required regulatory approvals are obtained, including the receipt of Transport Canada approval, the transaction is expected to close in mid-2024.
The Competition Bureau has poured cold water on the proposed $46.6 billion merger between US agricultural giant Bunge and Regina-based Viterra, throwing a potential roadblock on one of the largest tie-ups in Canadian history.On Tuesday, the bureau released a report to the Ministry of Transport suggesting the deal would reduce competition in canola markets and impact the transportation and sale of 90 million tonnes of wheat, canola, soybeans, barley, corn, oats and rye to grain elevators in Western Canada.The bureau further determined that the deal is ”likely to harm competition” in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada that don’t have rail access to those products..“The Competition Bureau has concluded that the proposed acquisition… is likely to result in substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada,” in Canada.Bunge is one of the largest grain merchants in the US while Viterra is the successor company to farmer cooperatives including the Saskatchewan Wheat Pool.Viterra is one of Saskatchewan’s largest employers with more than 18,000 people worldwide.The proposal would result in the merger of two of Canada's largest canola purchasers, with Bunge operating the largest number of oilseed crushing facilities in Canada and Viterra operating two crushing facilities and the largest number of grain elevators on the prairies.When the deal was announced last summer they said the combined company would allow it to compete with global rivals Archer-Daniel’s-Midland and Cargill..“Following Bunge’s merger with Viterra, the potential for competitive harm resulting from this access to confidential information will be greatly amplified given Viterra and G3 compete in a number of markets in the agricultural supply chain in Canada,”Competition Bureau report.The kicker is that Bunge is already a minority shareholder in another Canadian grain company called G3, which also holds “significant” grain and terminal elevator assets in Canada.G3 was founded in 2015 as a joint venture between Bunge and the Saudi Agricultural and Livestock Investment Company to develop new grain handling and export infrastructure in Canada, including the construction of a new grain terminal facility in Vancouver. G3 operates 20 grain elevators in Canada, as well as terminal elevators at ports in BC, Ontario, and Quebec.That also raised red flags because the combined Viterra company would have access to G3’s economic and competitive strategies in Canada through Bunge’s minority interest which would “result in harm to competition because of Bunge’s ability to materially influence Viterra’s rival G3.”“Following Bunge’s merger with Viterra, the potential for competitive harm resulting from this access to confidential information will be greatly amplified given Viterra and G3 compete in a number of markets in the agricultural supply chain in Canada,” it said.Transport Canada has until June 2 to review the report and make recommendations to minister Pablo Rodriguez, who will then take them to cabinet for a final decision.According to an emailed statement from Bunge, the companies are confident they can overcome the concerns.“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,” it said.“We are pleased the regulatory process is advancing and are confident the transaction will yield considerable benefits to Canada. These will include stronger supply chains in uncertain global markets, maintaining Canadian leadership in agriculture and food by increasing capacity to invest, and employing thousands of Canadians in well-paying jobs.”Once the remaining required regulatory approvals are obtained, including the receipt of Transport Canada approval, the transaction is expected to close in mid-2024.
