![The rapid growth of new cotton growing areas in northern Australia has caused the corporate regulator to become concerned about the cotton ginning business. Picture from Chris McLennan. The rapid growth of new cotton growing areas in northern Australia has caused the corporate regulator to become concerned about the cotton ginning business. Picture from Chris McLennan.](/images/transform/v1/crop/frm/39XqhrgY6riNnQBs6VEtc8R/539414aa-96e5-4593-80f8-9c7dd6796e25.jpg/r0_76_4288_2706_w1200_h678_fmax.jpg)
Australia's corporate regulator has intervened in the proposed takeover of Namoi Cotton.
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The Australian Competition and Consumer Commission today (Thursday) has issued a list of "concerns" about the proposed buyout of Australia's biggest cotton ginning business by European commodities giant Louis Dreyfus Company.
LDC is incorporated in Singapore as part of the Louis Dreyfus Company Group.
LDC has been in a tussle with Olam Agri to win full control of the Australian ginning group.
The ACCC has now become involved in the corporate battle, saying LDC and Namoi both supply cotton ginning, cotton lint classing, logistics and warehousing services.
Both also buy and market cotton lint and cottonseed.
"The ACCC is concerned the proposed acquisition would be likely to substantially lessen competition in the supply of cotton ginning services in the north of WA and NT and the supply of cotton lint classing services," the commission said in a statement.
"The ACCC is also considering whether the proposed acquisition may substantially lessen competition in the marketing of cotton lint and seed."
At the centre of the ACCC's "concerns" are the building of new cotton gins in Katherine NT and Kununurra, WA.
Namoi has been contracted to build and operate the Kununurra cotton gin and is a minority shareholder of this gin's holding company.
LDC has entered into a joint venture for the management and operation of the Katherine cotton gin, which is due to begin processing work within months.
![Namoi Cotton operates Australia's biggest cotton ginning business. File picture. Namoi Cotton operates Australia's biggest cotton ginning business. File picture.](/images/transform/v1/crop/frm/39XqhrgY6riNnQBs6VEtc8R/ff41e102-1c09-47aa-a954-28566bbe7713.jpg/r0_699_4032_2966_w1200_h678_fmax.jpg)
LDC also operates three cotton gins located in Emerald and Dalby (Queensland) and Moree (NSW).
It supplies cotton warehousing and logistics services with facilities in Dalby and the Port of Brisbane (Queensland) and Moree (NSW).
"If this acquisition proceeds, LDC will be involved in operating the only two cotton gins in the north of WA and the NT," the ACCC said.
"We are concerned it would result in LDC being able to reduce competition between these two cotton gins, which may result in higher prices or reduced service levels for ginning services," ACCC Commissioner Stephen Ridgeway said.
"Growers benefit from competition between cotton gins, and once both are operational, the Katherine gin will be by far the closest competitor to the Kununurra gin."
The ACCC also worries the proposed acquisition would lessen competition in the supply of cotton lint classing services in Australia.
'Classing' occurs at the conclusion of the cotton ginning process when a sample is collected from each bale of cotton lint and sent for grading.
"The acquisition would result in LDC having ownership interests in two providers of cotton lint classing services, ProClass and Australian Classing Services, which together class more than 80 per cent of all cotton lint in Australia," Mr Ridgeway said.
The ACCC is also investigating the impact of the proposed acquisition on LDC's ability and incentive to negatively impact rival merchants' access to cotton lint, and its ability to limit access to or increase prices for warehousing services for the export of cotton out of the Port of Brisbane.
The commission said it was also "consulting" on a divestment undertaking draft proposal, which has been put forward by LDC to address the ACCC's competition concerns on cotton ginning across the north.
The ACCC has invited submissions in response to its "concerns" by May 30.
Namoi operates 10 cotton gins at nine sites across NSW and Queensland.
It is also involved in a joint venture with the Wathagar Ginning Company, with a cotton gin located in the Gwydir Valley (NSW).
Namoi has an interest in the Kimberley Cotton Company, which will operate a cotton gin in Kununurra (WA). This cotton gin's construction is due to be completed in July 2025.
LDC has two joint venture arrangements in place with Namoi - the Namoi Cotton Alliance (NCA), and the Namoi Cotton Marketing Alliance (NCMA). The NCA stores and transports cotton lint bales through its warehousing facilities.
It has warehouse facilities in Wee Waa, Warren and Goondiwindi. The NCMA is involved in the trading and marketing of cotton lint.
Namoi exclusively supplies all cotton lint bales acquired by it to the NCMA and the NCMA exclusively supplies its services to Namoi.
Louis Dreyfus Company said in a statement: "LDC understands the ACCC's important role in protecting and promoting competition in markets and is committed to fully cooperate with the ACCC to ensure they have all the information required to complete their assessment.
"As a well-established player in the Australian market, with over 110 years of operations in the country and a strong balance sheet, LDC is committed to continued investment in ginning infrastructure to ensure a competitive and thriving industry.
"Equally, Namoi Cotton's extensive network of cotton gins and well-established industry relationships offer valuable synergies with LDC's own operations in Australia.
"As such, we are confident that the acquisition of Namoi Cotton by LDC would support the long- term future and growth of the cotton industry in Australia, enhancing our service offering and creating added value for the grower community, wider agricultural sector and other stakeholders."