Lactalis has received clearance from the Australian Competition and Consumer Commission (ACCC) to acquire Fonterra’s consumer, dairy ingredients, and food service businesses in the country.
ACCC deputy chair Mick Keogh acknowledged concerns from some industry groups but said a thorough review concluded the deal is unlikely to result in a substantial lessening of competition.
“Because Fonterra and Lactalis have differing end product mixes, they often seek to acquire milk from farmers with different production profiles,” Keogh said.
“Accordingly, we found that they are not likely to be each other’s closest competitors. This was reflected by analysis, which showed very few farmers switched between the two processors.”
Both companies currently buy raw milk from farmers in Victoria and Tasmania and supply a broad range of dairy products nationwide.
The ACCC found that in regions such as Gippsland, the Murray, and Western Victoria, alternative buyers would continue to provide competitive pressure on Lactalis post-acquisition.
“We found that while the industry in Tasmania is already concentrated, Lactalis has a limited presence and the acquisition would not substantially alter the market dynamics,” he added.
Fonterra has been working on the divestment of its consumer products segment since last year. The business owns brands such as Western Star, Mainland, and Perfect Italiano, and produces certain Bega Cheese products under licence.
In May, Reuters reported that Lactalis was among several bidders considering Fonterra’s divestment, part of a $2.37 billion transaction.
The French company owns a range of brands such as Pauls, Vaalia, Oak, President and Lactalis Foodservice in Australia.
Last month, Bega Cheese announced plans to seek ACCC approval for its proposed acquisition of Fonterra Oceania.
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