Australian Dairy Farmers are optimistic the Australian Competition and Consumer Commission (ACCC) will oppose the sale of two Saputo milk factories to retailer Coles. The deal which was announced in April this year would see Coles gain control over Saputo’s processing plants in Laverton, Victoria and Erskine Park in NSW. In July, the ACCC expressed concerns the acquisition could trigger major structural shifts in the sector.
ADF president Rick Gladigau said the lobby group is concerned the deal will lead to a loss of transparency and bargaining power and create imbalance for farmers who will lose competition for their milk. Gladigau said the lack of trust in Coles is based in the retailer’s actions during the 2011 dairy downturn when Coles was the first to introduce $1/l milk. ADF is concerned the current deal will remove third-party involvement with Coles owning the entire supply chain from farmgate to through to the shop shelf. If the deal goes ahead, the ADF president said there needs to be measures in place to ensure farmers are protected into the long-term, including better protections for producers under the Food and Grocery Code.
In an ASX statement from July, Coles said it does not see a lessening of competition in any relevant market with the deal as Coles already buys around 80% of the volumes at the facilities and will continue to provide milk processing services to Saputo under a tolling agreement. The ACCC was expected to make a decision on 14 September, however, the competition watchdog has since delayed its decision indefinitely.
Meanwhile, the ACCC has launched a formal inquiry into Bega Cheese’s $11m acquisition of Tasmanian Betta Foods.