Coles’ acquisition of Saputo plants given the ACCC thumbs up

The competition regulator has given the green light for Coles’ proposed acquisition of two Saputo milk processing plants.

The competition regulator has given the all clear for Coles to acquire two Saputo Dairy Australia (SDA) milk processing plants. Picture: NCA NewsWire / Martin Ollman

The competition regulator has given the all clear for Coles to acquire two Saputo Dairy Australia (SDA) milk processing plants.

The green light from the Australian Competition and Consumer Commission (ACCC) will allow Coles to take on two plants located in Erskine Park in New South Wales and Laverton in Victoria.

The decision follows discussions with key stakeholders in July which resulted in a statement of issues from the ACCC outlining the regulator’s concerns that the proposed deal could increase Coles’ bargaining position in the dairy supply chain.

ACCC also raised the issue that the acquisition may change SDA’s incentives and result in it leaving the raw milk market in New South Wales.

ACCC deputy chair Mick Keogh on Friday said the commission “acknowledges the strong concerns raised by some dairy industry participants about Coles’ acquisition of milk processing facilities”.

“We explored the industry’s concerns very closely through discussions with farmers and their representative bodies, and conducted a detailed review of Saputo and Coles’ internal documents and their incentives,” Mr Keogh said.

“After careful consideration, we concluded that, compared with the current state of competition where the majority of the capacity at these facilities is already contracted to Coles, the acquisition is unlikely to result in a substantial lessening of competition in breach of section 50 of the Competition and Consumer Act.”

SDA said it is pleased with the ACCC’s decision to approve the deal.

“Approximately 48 roles across the two sites will transfer to Coles Group Limited upon completion of the sale process, which is expected to occur towards the middle of calendar 2024,” it said.

“SDA will continue to work closely with Coles Group Limited to finalise the transaction and ensure the transition has minimal impact on operations and all stakeholders involved.”

The manufacturer said it remains committed to the Australian dairy industry and will continue to make investments and decisions to boost its return and strengthen its position in the market.

But Business Council of Co-operatives and Mutuals (BCCM) chief executive Melina Morrison said farmers will be disadvantaged by this 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.

“However, the issue goes beyond the fortunes of individual farm enterprises and the prices they receive for their products. Australia’s domestic food security and potential export earnings and income tax derived from dairy could all be impacted.”

The ACCC predicts SDA will continue to sell Devondale milk in New South Wales.