Australian Dairy Farmers group calls for ACCC scrutiny of Saputo-Coles deal

One of dairy’s top names has called for the ACCC to examine the move by Coles to take over Saputo’s Melbourne and Sydney plants.

A multimillion deal between Saputo and Coles needs greater scrutiny, the president of the Australian Dairy Farmers group says.

Supermarket giant Coles confirmed earlier this month it would become a milk processor for the first time, buying Saputo’s Melbourne and Sydney plants for $105 million.

The acquisition process is expected to wrap up next year.

Rick Gladigau told The Weekly Times that the Australian Competition and Consumer Commission needed to closely examine the Saputo-Coles deal to ensure it maintained competition at the dairy farmgate.

“We want an industry that has plenty of competition in it,” Mr Gladigau said.

“We don’t want to decrease competition in the sector,” he said.

Australian Dairy Farmers president Rick Gladigau.

“The ACCC needs to look at this deal. It’s not just the short term (implications), it’s the long term. If Coles have a monopoly on the market, they may pay a good price now but how do we know that in five to 10 years’ time that’s going to be there.

“The ACCC need to do some homework on this to make sure this doesn’t cost the dairy industry in the long-term.”

The opening of the Murray Goulburn plant at Laverton in 2014. Picture: Luis Enrique Ascui

The Melbourne plant, based at Laverton, was opened by Prime Minister Tony Abbott in 2014 with a price tag of $80 million.

The Laverton site and its $60 million sister plant in Sydney, at Erskine Park, were constructed by Murray Goulburn.

With the demise of MG in 2017, Saputo took over the operation of the two plants which have produced Coles private brand since opening nearly a decade ago.

A Coles spokeswoman said: “Coles introduced a direct sourcing model for our own brand

milk in 2019 to ensure we could provide fair, competitive and guaranteed farm gate prices to dairy farmers directly.

“These longer term contracts offer farmers greater security of income so that they can invest back into their farms and make them more sustainable.

“The direct sourcing model also ensures we can provide our customers with great quality locally sourced milk for the long-term.”

The ACCC were contacted by The Weekly Times for comment.