The Australian Competition and Consumer Commission (ACCC) will not oppose Lactalis BSA S.A.S (Lactalis)’s proposed acquisition of Fonterra’s consumer dairy ingredients and food service businesses.

While noting the merger would result in further consolidation in Tasmania the ACCC has determined the acquisition is unlikely to result in a substantial lessening of competition. The ACCC found that across Gippsland, the Murray and Western Victoria, alternative buyers of raw milk would continue to constrain Lactalis if the acquisition proceeded. The ACCC also concluded that the transaction was unlikely to substantially lessen competition in the wholesale supply of dairy products such as drinking milk, cream, cheese, chilled yellow spreads and dairy ingredients like milk powder.

Australian Dairy Farmers (ADF) has expressed “serious concerns” claiming combining two major milk buyers reduces choice and bargaining power for farmers, threatening farmgate prices “especially in a shrinking milk pool”.

Following Lactalis’s application for an informal merger review on 2 May, Bega applied to the ACCC for a review on 16 June. That review has not commenced, with the ACCC reportedly seeking further clarification on some issues from Bega.