The Australian Competition and Consumer Commission (ACCC) has approved a merger between the country’s two largest dairy processing companies, Lactalis and Fonterra.
The planned takeover of Fonterra’s consumer, dairy ingredients and food service businesses by French group Lactalis would create a massive dairy company in Australia.
Dairy company Lactalis has been given approval by the ACCC to take over Fonterra. (ABC News: Warwick Long)
Both companies buy and process raw milk from dairy farmers in Victoria and Tasmania.
They also process and supply a range of dairy products across Australia.
ACCC deputy chair Mick Keogh said the commission looked closely at the planned takeover.
“It will combine two of the largest buyers of raw milk in Victoria and lead to some further consolidation in Tasmania,” he said.
Substantial drop in competition ‘unlikely’
Mr Keogh acknowledged concerns about reduced competition if the merger went ahead, but said it was not expected to significantly change market dynamics.
“After careful consideration we have determined that the acquisition is unlikely to result in a substantial lessening of competition.”
Mick Keogh says the takeover is unlikely to reduce competition. (ABC News: John Gunn)
The ACCC found that alternative buyers of raw milk would still constrain Lactalis in Gippsland, the Murray and western Victoria.
“While the industry in Tasmania is already concentrated, Lactalis has a limited presence and the acquisition would not substantially alter the market dynamics.” Mr Keogh said.
The commission said the differing production focus of Fonterra and Lactalis meant there would be limited overlap in products.
Ben Bennett says the dairy industry is fragile and he is concerned about the impact of the merger on farmers. (Supplied: Peter Somerville)
Milk monopoly concerns
Dairy Farmers Australia president Ben Bennett is hoping the acquisition does not go ahead.
“We’re going to see the top three dairy companies effectively control 70 per cent of Australia’s raw milk production,” he said.
Mr Bennett, who is a dairy farmer in south-west Victoria, said the concentration of power would put downward pressure on the price farmers were paid for the milk they produced.
“We’re a very fragile industry,” he said.
“We’ve been retracting over the last 20 years and this is not going to help.
“I’d like to see some other competing interests come into the process and who haven’t necessarily got a footprint here in Australia.”
Lactalis and Fonterra have been contacted for comment.
SOURCE : DAIRYNEWS7X7 JULY 10 2025 ABC NEWS By Justine Longmore, Annie Brown