ACCC greenlights Lactalis’ acquisition of Fonterra’s assets in Australia

AUSTRALIA – The Australian Competition and Consumer Commission (ACCC) has cleared French company Lactalis to buy the Fonterra consumer business after deciding it didn’t have competition concerns regarding the operations of the businesses in Australia.

Lactalis and Fonterra both currently acquire raw milk from dairy farmers in Victoria and Tasmania, as well as processing and supplying a range of dairy products across Australia, the Australian Competition and Consumer Commission (ACCC) said.

ACCC explained that although Tasmania’s dairy industry is already highly concentrated, Lactalis has only a modest footprint there.

As a result, the proposed acquisition is unlikely to have a significant impact on competition. ACCC Commissioner Keogh noted that even if the deal were to proceed, Lactalis would still face competitive pressure from other major players, such as Saputo, and to a lesser degree, Mondelez.

ACCC deputy chairman Mick Keogh said, “We looked very closely at the transaction as it will combine two of the largest buyers of raw milk in Victoria and lead to some further consolidation in Tasmania. While we acknowledge the concerns raised by some representative bodies, after careful consideration, we have determined that the acquisition is unlikely to result in a substantial lessening of competition.”

The news comes after Lactalis was issued with an under consideration notice from the Australian Competition and Consumer Commission (ACCC) to acquire Fonterra’s up-for-sale consumer-facing dairy assets.

The Australian Competition and Consumer Commission (ACCC) issued the notice relating to the proposal, inviting feedback on the proposal from interested parties, stating in a statement that Lactalis proposes to acquire Fonterra’s global consumer business and the cooperative’s dairy and ingredients foodservice businesses in Australia.

According to the ACCC, Lactalis has around 500 milk suppliers across New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia. It processes milk into cheeses, spreads and yogurts, and also processes dairy ingredients such as milk powders.

The ACCC added that Lactalis and Fonterra overlap in various parts of the dairy supply chain, hence the request for comments by 16 May.

Those areas were listed as the purchase of raw milk, mainly in Victoria and Tasmania. And processing into finished dairy products like cheese, spreads and yogurts, as well as ingredients such as milk fats, whey powders and lactose.

Lactalis issued a follow-on statement, acknowledging it was in response to the ACCC’s filing.

“As the leading dairy group, global development is core to our growth plans, and we are naturally considering investments in Australia and internationally,” Lactalis added.

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