Australia’s ACCC Raises Concerns Over Olam Agri’s Namoi Cotton Acquisition

Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), has raised significant competition concerns regarding Singapore-based Olam Agri’s proposed acquisition of Namoi Cotton for A$144.9 million (S$130.8 million).

The acquisition bid has sparked an international bidding war between Olam Agri, an affiliate of Singapore’s Olam Group, and the Dutch commodity merchant Louis Dreyfus Company. Both firms aim to expand their presence in Australia, a key market for cotton production and processing.

Olam Agri, operating through its subsidiary Queensland Cotton, and Namoi Cotton are major players in the Australian cotton industry. Both companies provide a range of services including cotton ginning, cotton lint classing, logistics, and warehousing. They are also involved in the acquisition and marketing of cotton lint and cottonseed.

Stephen Ridgeway, a commissioner at the ACCC, expressed concerns about the potential reduction in competition if the acquisition proceeds. “The proposed acquisition would reduce the number of competing ginning suppliers in the Lower Namoi Valley from three to two, with Olam operating four of the five cotton gins if the acquisition proceeds,” Ridgeway stated.

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This consolidation would leave only one alternative cotton gin in the Lower Namoi Valley region, operated by Australian Food and Fibre. The ACCC is worried that this reduction in competition could lead to higher prices for cotton growers in the region and could negatively impact the supply of cotton lint classing services across Australia.

The regulator emphasized the importance of maintaining a competitive market to prevent adverse effects on pricing and service quality for cotton producers. The concerns raised by the ACCC highlight the potential risks associated with the merger and its impact on the broader Australian cotton industry.

Source: Straits Times