The ACCC is considering concerns raised by industry participants regarding Coles’ proposed acquisition of two Saputo milk processing plants located in NSW and Victoria, given it will result in a major structural change as the first time a supermarket owns and operates its own milk processing facilities.
Coles currently acquires raw milk from farmers in both Victoria and NSW, and processes it at these plants under an arrangement with Saputo.
In a Statement of Issues published today the ACCC said it is closely considering the concerns and whether the acquisition would give Coles the ability to influence the market in a way that is currently not possible via its current position as a retailer of dairy products and purchaser of raw milk.
The ACCC is also concerned that Coles’ increased bargaining power could lead to reduced competition at the wholesale level, impacting on processors long term viability and with the potential for flow on impacts to farmers in Queensland and regions of NSW.
ACCC deputy chair Mick Keogh said NSW dairy farmers had raised concerns that the acquisition may change Saputo’s incentives to continue acquiring raw milk in NSW.
“If Saputo does exit NSW as a result of the acquisition, this would leave limited competition in regions of NSW, which could result in farmers receiving lower prices for their raw milk,” Keough said.
The ACCC is carefully considering whether or not Saputo would be likely to exit NSW after the acquisition.
“We have heard strong concerns across the industry about how the acquisition will strengthen Coles’ position in the dairy supply chain.
“Many industry participants have expressed concerns that the acquisition will result in Coles consolidating its private label milk production, which would increase its bargaining power in negotiations with dairy processors and dairy wholesalers,” Keogh said.
The ACCC is inviting submissions from interested parties in response to the Statement of Issues by 3 August.
Saputo Dairy is #6 on the Food & Drink Business 2022 Top 100 Food & Drink Companies report.
