The Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose Lactalis BSA S.A.S.'s proposed acquisition of Fonterra Co-Operative Group's consumer, dairy ingredients, and food service businesses. This decision comes after a thorough review of the transaction, which involves two of the largest buyers of raw milk in Victoria and Tasmania.

ACCC Deputy Chair Mick Keogh stated that while the acquisition would lead to further consolidation in Tasmania, it is unlikely to result in a substantial lessening of competition. The ACCC found that alternative buyers of raw milk would continue to exist, providing sufficient competition to Lactalis even after the acquisition.

In Tasmania, where the dairy industry is already concentrated, Lactalis has a limited presence, and the acquisition would not significantly alter market dynamics. The ACCC noted that Lactalis would still face competition from other players like Saputo and Mondelez.

The differing end product mixes of Fonterra and Lactalis mean that they do not compete closely for the same farmers, as they typically seek milk from farmers with different production profiles. This was supported by evidence showing minimal switching between the two processors by farmers.

Furthermore, the ACCC concluded that the acquisition would not substantially lessen competition in the wholesale supply of various dairy products, including drinking milk, cream, and cheese. The presence of major retailers like Coles and Woolworths, who have significant bargaining power, also contributes to maintaining competitive dynamics in the market.

While the ACCC has reviewed the acquisition, it does not guarantee that Fonterra will accept Lactalis' bid, as that decision remains with Fonterra.