Agrium agrees to divestitures to get ok to acquire Viterra’s retail agricultural business
September 11th, 2013
The Competition Bureau has announced that they have entered into a consent agreement with Agrium which addresses the Bureau’s concerns arising from Agrium’s proposed acquisition of the majority of Viterra Inc.’s retail agricultural business from Glencore International PLC. During the merger review process, the Bureau concluded that the proposed merger would likely lead to a substantial prevention or lessening of competition in the retail supply of anhydrous ammonia and urea to farmers in certain areas of Alberta and Saskatchewan. As a result, the consent agreement calls for Agrium to divest seven retail stores and nine anhydrous ammonia businesses in the affected areas of Alberta and Saskatchewan.
The agreement also calls for Agrium to supply anhydrous ammonia to any purchaser of the divested assets for up to four years at prices not to exceed those charged to its retail outlets in Alberta and Saskatchewan. This provision was placed in the consent agreement as a result of the Bureau’s concerns about the ability of retailers to source anhydrous ammonia in a concentrated manufacturing industry.
During the review, the Bureau concluded that Agrium and Viterra were close rivals, and that Viterra was a vigorous competitor of Agrium, which is the largest manufacturer of anhydrous ammonia and urea in Western Canada. Due to specific physical and chemical characteristics of the two products in question, the Bureau concluded that the geographical scope of the market for these two products was local. Accordingly, the Bureau reviewed the 40 local markets where the parties overlapped in the retail supply of anhydrous ammonia and urea. They identified the local markets where there was a high level of concentration, and the consent agreement addresses these specific local markets.