KPPU’s assessment of the acquisition of Glencore Agriculture Limited by Monroe Canada Inc. CPPIB.
KPPU has completed its assessment on the acquisition of Glencore Agriculture Limited by Monroe Canada Inc CPPIB in December 2018. The acquisition involved transactions in the agricultural sector in Indonesia, particularly wheat products.
Monroe Canada Inc. CPPIB is a Canadian company which was established on March 23, 2016 and is domiciled in Toronto, Canada. Monroe Canada Inc. CPPIB has no business activities in Indonesia. The company is a subsidiary of Canada Pension Plan Investment Board (CPPIB), an organization engaged in investment management that invests Canada Pension Plan (CPP) funds based in Toronto, Canada. In Indonesia, CPPIB has sales in Indonesia through several companies engaged in international sports media, software development, and retail of luxury goods.
Meanwhile, Glencore Group is a company engaged in the production and marketing of metals, minerals, energy and agriculture as well as marketing and logistics activities. In particular, Glencore Agriculture Limited (GAL) is Glencore Plc’s global agricultural holding company which resulted from a reorganization at Glencore Plc that occurred in 2016, before the acquisition in December 1, 2016. GAL is active, at the global level, in starting, handling, processing and marketing agricultural commodities, including grains, vegetable oils, nuts, sugar, rice, cotton, vegetable oils, protein foods and biodiesel. In Indonesia, GAL is active in the sale of wheat, cotton and agricultural commodities (grain products).
Noting that the transaction is in a different relevant market, the KPPU’s assessment focuses on the potential impact of the transaction on strengthening the dominance of the acquired company in Indonesia, namely wheat products. The assessment saw that in 2016, Indonesia imported wheat products worth USD 3,131 million. As for the wheat products, the import value is USD 2.4 billion with a quantity of 10.53 million tons. Most of the wheat in Indonesia is mostly imported from Australia, Ukraine and Canada. The wheat imports are mostly absorbed by the flour industry which is then distributed to the food and beverage industry. However, the assessment noted that GAL was not the market leader of wheat in Indonesia, with a market share that could not be said to be dominant.
Based on the analysis of the relevant market and the potential impact of the transaction, the KPPU’s judgment concluded that the acquisition did not have much impact on changes in concentration levels for the wheat market in Indonesia. As such, it does not raise concerns over allegations of monopolistic practices and unfair business competition.