The Australian Competition and Consumer Commission (ACCC) has approved Saputo’s sale of two factories—one in Victoria and one in NSW—to Coles after considering the effect of the proposed acquisition on raw milk markets in NSW, Victoria and South Australia. ACCC found the acquisition was unlikely to substantially lessen competition in these markets; in NSW, Saputo has just signed a five year toll-processing agreement with Coles providing a commercial incentive to continue selling Devondale branded milk across the state. ACCC deputy chair Mick Keogh acknowledged concerns raised by dairy industry stakeholders however ruled the significant excess capacity at the two factories meant that Coles’ commercial incentives to consolidate its milk supply would exist with or without the sale.
Lobby group Australian Dairy Farmers (ADF) called the ACCC decision to allow the sale of the factories to Saputo “a key turning point that the industry and ACCC will look back upon and regret.” ADF is disappointed in the missed opportunity to impose additional safeguards or undertaking on Coles.
Meanwhile, the ACCC has given final approval to Bega’s acquisition of Betta Milk in Tasmania, the Meander Valley Dairy brand and a license of the Pyengana Dairy brand. ACCC found the acquisition was unlikely to lead to a substantial lessening of competition in Tasmania as Bega has significantly lower market share in branded fresh white milk there. Ashgrove and TasFoods are the primary competitors in wholesaling of branded and premium fresh white drinking milk in Tasmania.