Australia’s competition watchdog has started an investigation into Bega’s joint move to acquire Fonterra’s Australian assets.

The Australian Competition and Consumer Commission has formulated a series of questions for dairy farmers and processors for its inquiry.

Fonterra is selling off its Oceania division which comprises consumer, food services and ingredients businesses.

Bega is partnering with Dutch-based multinational company, FrieslandCampina NV, in the bid.

ACCC general manager of merger assessments Morag Bond said the ACCC’s public investigation is focused on the impact on competition.

The commission is seeking views on whether the proposed acquisition would likely reduce competition in the acquisition of raw milk in the areas where the parties overlap, reduce competition in the supply of milk processing services to processors and retailers in the areas where the parties overlap or reduce competition in the wholesale supply of dairy products, such as milk, cheese, butter and cream, and dairy ingredients.

Fonterra’s Australian division employs around 1500 staff and sources raw milk from about 650 dairy farmers based in Victoria, Tasmania and parts of South Australia and NSW.

Fonterra operates eight processing plants in Victoria and Tasmania, including at Stanhope.

Bega’s view is that the acquisition would create greater efficiencies in the national dairy industry and better outcomes for farmers.

Bega is one of Australia’s largest purchasers of raw milk, collecting 1.3 billion litres of raw milk annually under more than 600 farmer supply contracts and employing around 3900 staff across 19 manufacturing sites

In questions designed to stimulate discussion, the ACCC asks dairy farmers for their reaction to a decrease in farm gate milk prices by five to 10 per cent.

Other questions revolve around calving patterns and what influences the choice of processor.

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Thursday, 29th June 2023

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