Coles expects its acquisition of two state-of-the-art automated milk processing facilities from Saputo Dairy Australia will be completed in the first half of next year after the competition regulator gave its blessing.
The Australian Competition and Consumer Commission (ACCC) announced on Dec. 1 it would not move to block the $105 million (US$70 million) deal first announced in in April between Coles and the Australian subsidiary of Canadian diary giant Saputo Inc.
The facilities are in Laverton North, Victoria, and Erskine Park, New South Wales (NSW). Both are close to Coles distribution centres.
Each has the capacity to process 225 million litres of milk a year and they are predominantly used to process Coles Own Brand two and three litre milk.
Coles chief executive Leah Weckert said the supermarket giant was pleased with the ACCC’s findings.
“Once completed, the acquisition of these state-of-the-art facilities will enable Coles to improve security of our milk supply and supply chain resilience and allow us to continue to build on the strong relationships we have developed with our dairy farmers,” Ms. Weckert said.
Melina Morrison, chief executive of the Business Council of Co-operatives and Mutuals—the peak body for Australia’s co-operatives and mutuals sector—was disappointed by the ACCC’s decision.
“As processing facilities are further concentrated in the hands of a few investor-owned dairy processors and retailers, there is less and less pressure on these businesses to share profits with farmers,” Ms. Morrison said.
“That means farmers will have less capacity to reinvest in the sustainability of their own businesses.”
ACCC deputy chair Mick Keogh acknowledged the strong concerns raised by some industry participants about the acquisition.
Mr. Keogh said the ACCC found that given the majority of the capacity at these plants was contracted to Coles, the acquisition was unlikely to result in a substantial lessening of competition.
The ACCC found other dairy companies such as Lactalis and Bega would continue to be competitors for raw milk in central NSW and the acquisition was unlikely to change this.
