The ACCC has published a Statement of Issues outlining preliminary competition concerns with
In
The ACCC is concerned that the proposed acquisition would be likely to substantially lessen competition in the supply of cotton ginning services in the north of
The ACCC is also considering whether the proposed acquisition may substantially lessen competition in the marketing of cotton lint and seed.
The ACCC's concerns regarding the north of
Namoi has been contracted to build and operate the Kununurra cotton gin and is a minority shareholder of this gin's holding company. LDC has entered into a joint venture for the management and operation of the Katherine cotton gin, due to commence operations in mid-2024.
"If this acquisition proceeds, LDC will be involved in operating the only two cotton gins in the north of
"Growers benefit from competition between cotton gins, and once both are operational, the Katherine gin will be by far the closest competitor to the Kununurra gin."
The ACCC is also concerned that the proposed acquisition would be likely to substantially lessen competition in the supply of cotton lint classing services in
'Classing' occurs at the conclusion of the cotton ginning process when a sample is collected from each bale of cotton lint and sent for grading.
"The acquisition would result in LDC having ownership interests in two providers of cotton lint classing services, ProClass and Australian Classing Services, which together class more than 80 per cent of all cotton lint in
The ACCC is also investigating the impact of the proposed acquisition on LDC's ability and incentive to negatively impact rival merchants' access to cotton lint, and its ability to limit access to or increase prices for warehousing services for the export of cotton out of the
In addition to considering the concerns outlined in the Statement of Issues, the ACCC is also consulting on a divestment undertaking draft proposal, which has been put forward by LDC to address the ACCC's competition concerns in the supply of cotton ginning services in the north of
The Statement of Issues and proposed divestment undertaking draft proposal can be found on the ACCC's public register:
The ACCC invites submissions in response to the Statement of Issues by
Background
LDC is incorporated in
LDC operates 3 cotton gins located in Emerald and Dalby (
LDC holds a 20 per cent interest in ProClass, which supplies cotton lint classing services. It also has a joint venture with WANT Cotton for the operation and management of the WANT cotton gin located near Katherine (NT). This cotton gin is expected to be operational by mid-2024.
Namoi is an ASX-listed company with its business comprising ginning, cotton lint classing, cottonseed and cotton lint marketing as well as warehousing and logistics services.
Namoi operates 10 cotton gins at 9 sites across NSW and
Namoi has a ~17 per cent interest in the
LDC has two joint venture arrangements in place with Namoi - the
.
(C) 2024 M2 COMMUNICATIONS, source