Australia’s competition watchdog said on Thursday that it would not oppose Lactalis’ proposed acquisition of New Zealand-based Fonterra Co-Operative Group’s consumer, dairy ingredients and food service businesses.
The Australian Competition and Consumer Commission’s (ACCC) Deputy Chair Mick Keogh said it was unlikely that the acquisition would 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. Accordingly, we found that they are not likely to be each other’s closest competitors,” Keogh said.
France-based Lactalis owns a range of brands including Pauls, Président and Lactalis Foodservice in Australia, while Fonterra owns consumer brands such as Western Star, Mainland, and Perfect Italiano.
Lactalis and Fonterra are also the largest buyers of raw milk in Victoria, with substantial presence in Tasmania.
The ACCC’s informal review of the French dairy group’s unannounced bid for Fonterra assets in early May came after Reuters reported that companies including Japan’s Meiji, Lactalis and Canada’s Saputo were considering bids for Fonterra units up for divestment.
Following the Reuters report, Lactalis said it had not signed any agreement regarding the potential acquisition of parts of Fonterra.
Lactalis and Fonterra did not immediately respond to Reuters’ requests for comment.
Meanwhile, Australia’s Bega Cheese said in June it plans to seek an informal regulatory approval for the acquisition of Fonterra’s Oceania business.
However Fonterra, which produces certain Bega Cheese products under licence, said in an emailed statement to Reuters that it intends to divest its global consumer and integrated businesses, including Oceania and Sri Lanka, as a whole.
The divestment plan, potentially valued at around NZ$4 billion ($2.40 billion), was first announced in November last year by the company.
Bega Cheese did not immediately respond to a Reuters request for comment.
($1 = 1.6647 New Zealand dollars)
(Reporting by Sherin Sunny in Bengaluru)
