The Australian Competition and Consumer Commission (ACCC) will investigate retailer Coles’ plans to take over two Saputo plants in NSW over concerns the acquisition could change Saputo’s incentives to continue acquiring raw milk in NSW. ACCC deputy chair Mick Keogh said concerns had been raised Saputo could leave NSW, which would limit competition in regions of NSW and result in farmers receiving lower prices for raw milk.

Under the agreement, Coles would takeover two fresh milk processing facilities, one at Laverton North in Victoria and Erskine park in NSW, each plant with processing capacity of 225m litres per year. Australian Dairy Farmers’ president Rick Gladigau said currently Coles is paying a good farmgate price to suppliers, however, the attractive price is a result of competition for supply. Gladigau believes discussions about price will be very different if Coles gets control of the supply chain and don’t have any competitors for the milk.

In a statement, Coles chief executive Leah Weckert has defended the deal, saying Coles already buys around 80% of the volumes at supplied to facilities and provides milk to Saputo under a tolling agreement. Farmers have until 3 August to make submissions to the ACCC.