The ACCC has decided not to oppose the sale of Saputo Dairy Australia’s (SDA) two fresh milk manufacturing sites at Laverton North and Erskine Park to Coles Group.
In July, the ACCC considered concerns raised by industry participants regarding Coles’ proposed acquisition of two SDA milk processing plants, and released a Statement of Issues identifying its preliminary concerns that the proposed acquisition may increase Coles’ bargaining position in the dairy supply chain.
Concerns were also raised that the acquisition may change Saputo’s incentives and result in it exiting the raw milk market in New South Wales, which would reduce the number of buyers of raw milk.
The ACCC took into account Saputo’s financial data which indicated that it had a commercial incentive to continue selling its Devondale milk in New South Wales. Saputo also recently entered into a five-year toll processing agreement with Coles at the Erskine Park processing plant.
The ACCC also investigated concerns that the acquisition would strengthen Coles’ position in the dairy supply chain, and that it would give Coles the incentive and ability to adversely affect other processors, finding that Coles’ commercial incentives to consolidate its milk supply would exist with or without the transaction due to the significant excess capacity at the Laverton and Erskine Park facilities.
In a statement, the ACCC acknowledged that some stakeholders asked that conditions be imposed on Coles so its relationships with processors and farmers are effectively covered by existing industry behavioural codes.
The ACCC said that these safeguards were already in place, given that Coles’ conduct with farmers it purchases raw milk from is covered by the mandatory Dairy Code of Conduct in the same way as other processors and purchasers of raw milk. Coles’ interactions with processors is also covered by the voluntary Food and Grocery Code of Conduct.
SDA released a statement welcoming the ACCC’s decision, and said fresh milk products remained an important part of the business. As part of the sale agreement with Coles Group, SDA will continue to have fresh milk products processed at the two manufacturing facilities.
The company confirmed there would be no changes to SDA’s valued farmer relationships, retaining its direct Milk Supply Agreements with farmers, and suppliers’ milk will continue to be collected and processed throughout Victoria, New South Wales, South Australia and Tasmania.
Approximately 48 roles across the two sites will transfer to Coles Group upon completion of the sale process, which is expected to occur towards the middle of calendar 2024.
SDA will continue to finalise its transaction with Coles Group, ensuring the transition has minimal impact on operations and all stakeholders involved.
