Cold storage provider ‘still likely to face close competition in Victoria’
The Australian Competition and Consumer Commission (ACCC) will not oppose the proposed acquisition of the Oxford cold storage business by Emergent Cold, ruling there is adequate competition in the sector.
Emergent Cold and Oxford are two significant suppliers of third-party cold storage services in Victoria.
The former operates cold storage facilities around Australia and overseas, including five sites in Victoria. The latter only operates in Victoria, where it has a site in Laverton North.
That scenario initially raised competition concerns, however the ACCC notes there are two other large suppliers of cold storage services in Victoria, NewCold and Americold, both of which are part of multi-national cold storage businesses, while other competitors include AHG Refrigerated Logistics, Linfox and numerous smaller businesses.
How Emergent’s Oxford bid initially came under ACCC scrutiny, here
“The proposed acquisition raised preliminary concerns for the ACCC, but after closely considering further information received from the market and the parties, our view is that the deal is unlikely to substantially lessen competition,” ACCC Commissioner Stephen Ridgeway says.
“Some market participants were worried that Emergent Cold was removing its closest competitor and would gain control of almost 40 per cent of third-party cold storage capacity in Victoria.
“The ACCC took these concerns seriously.
“The ACCC ultimately found that, although there are some differences between how existing cold storage suppliers operate, the combined Emergent Cold-Oxford is still likely to face close competition in Victoria from a range of large and small alternative suppliers.”
The ACCC also took into account the potential for competing Victorian cold storage suppliers to expand and build new capacity in response to demand in the coming years, including the ability of some larger customers to sponsor such expansion if required.
The watchdog also considered the possibility that increases in the price of third party cold storage services may lead to some larger customers providing their own cold storage services in house in the future.
Emergent Cold is a wholly owned subsidiary of Emergent Cold L.P., a US-based provider of refrigerated third-party logistics and management services.
It entered the Australian market in late 2017, through its acquisition of the cold storage business of John Swire & Sons, Swire Cold Storage. It expanded in late 2018 by acquiring Montague Cold Storage.