Archived — Competition Bureau announces results of XL-Lakeside merger review
Ottawa, February 27, 2009 - The Competition Bureau announced today that it will not at this time challenge the acquisition by XL Foods Inc. of the beef packing plant operated by Lakeside, the Canadian subsidiary of Tyson Foods, Inc.
However, the Bureau intends to closely monitor the industry and will reassess the competitive impact of the transaction once the outcome of U.S. labelling measures, and the U.S. packers' response to these measures, are clear. The U.S. initiative could inhibit Canadian cattle producers' ability to sell into the U.S. market.
The Bureau's investigation of the transaction included interviews with over 50 industry participants in western Canada. In addition, the Bureau obtained investigatory orders requiring the production of documents and information from all major industry participants.
Significantly, the primary concerns raised by industry participants were not related to the transaction, but rather related to the possibility that the Lakeside plant, in Brooks, Alberta, would close if the transaction did not proceed, and to recent U.S. mandatory country-of-origin labelling legislation ("mCOOL"). Industry participants confirmed that U.S. packers purchased substantial volumes of slaughter cattle but they were concerned that U.S. packers may adopt more rigorous labelling requirements for beef products.
Industry participants anticipate that the final rule of mCOOL could enable U.S. packers to increase purchases of Canadian slaughter cattle. However, should U.S. buyers adopt more rigorous country-of-origin labelling practices for beef products, this could inhibit the sale of Canadian slaughter cattle to the U.S.
The Bureau will not hesitate to take appropriate remedial action should the Bureau's assessment reveal that the transaction has resulted or is likely to result in a substantial lessening or prevention of competition.
The Competition Bureau is an independent agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.
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