La Coop federee’s plans to expand into southern Ontario’s grain handling and crop input retail sectors are now down by four retail sites.
The federal Competition Bureau said Tuesday it has an agreement in place for its approval of a deal which will see Cargill’s Ontario grain and ag retail outlets and its joint-venture stake in South West Ag Partners go to La Coop for an undisclosed sum.
For the deal, which was announced back in March, to clear, La Coop has agreed to sell Cargill’s retail operations at Alliston, Harrow, Tilbury and Waterford, Ont. to “a purchaser acceptable to the commissioner,” the bureau said.
From its review, the bureau said, it “concluded that within certain local areas of southwestern and central Ontario, the proposed transaction would likely substantially lessen competition in the retailing of crop inputs, and specifically fertilizers and crop protection products.”
Specifically, the bureau said Wednesday in a position statement, Quebec-based La Coop’s agribusiness division — set to rebrand next year under the name Sollio Agriculture — distributes crop inputs including fertilizer, seed and crop protection products through its Agronomy Co. of Canada to the Agromart ag retail chain, in which it owns a 50 per cent stake.
On top of Cargill’s 12 crop input retail locations in the province, the deal would also give La Coop a 50 per cent stake in the five crop input retail sites operated by South West Ag.
In the four areas in question, the bureau found “the parties’ combined market shares were high; the parties were close rivals (and) the proposed transaction would likely result in the closure of one or more of the parties’ sites, thereby eliminating choice from the marketplace.”
Furthermore, the bureau said, in those areas, it would be “unlikely” for other new players to set up shop “due to the high costs of entry relative to anticipated long-term profitability.”
Harrow and Tilbury are about 40 km south and 55 km east of Windsor, respectively, while Alliston is about 40 km southwest of Barrie and Waterford is about 25 km south of Brantford.
Unlike on the Prairies, the bureau said, crops in Ontario tend to be grown on a smaller scale and “the ability for growers to store large quantities of crop inputs on-farm is much more limited.
“This scarcity of on-farm storage creates a ‘just-in-time’ demand for crop inputs and crop input application services that limit the arena within which significant substitution occurs.”
Thus, the bureau found “the relevant geographic markets for crop inputs retailing in this matter tended to be narrower than those it has investigated on previous matters in Western Canada.”
As for the sale of Cargill’s Ontario grain handling assets, the bureau said it found “early in its investigation” that part of the deal is “unlikely to result in a substantial lessening of competition with respect to grain handling.”
La Coop, the bureau said, has “limited pre-existing grain handling infrastructure in Ontario” and there remains “effective remaining competition from well-established grain handling entities.”
In all, the assets going to La Coop will include Cargill’s wholly-owned grain handling sites at Melbourne, Princeton, Shetland, Staples and Talbotville and its wholly-owned input retail sites at Clinton, Courtland, Harriston, Melbourne, Mount Albert, Princeton, Shetland and Talbotville.
La Coop will also get Cargill’s interest in the South West Ag grain handling sites at Becher, Grande Pointe, Rutherford, Tupperville and Wallaceburg, plus a share in South West-owned Palmerston Grain and in “all grain satellite relationships.”
That stake also includes an interest in South West’s crop input retail businesses at Becher, Dover, Eberts, Ridgetown and Rutherford.
The deal with La Coop doesn’t include Cargill’s export terminal in Sarnia, its AgResource crop inputs wholesale business or any other Cargill businesses in Ontario or elsewhere in Canada.
Matthew Boswell, the Competition Bureau’s interim commissioner, said in its release Tuesday that its agreement with La Coop and Cargill “will help maintain competitive prices and product choices for farmers in Ontario.” –– Glacier FarmMedia Network