The ACCC will not oppose Lactalis BSA S.A.S. (Lactalis)'s proposed acquisition of Fonterra Co-Operative Group (Fonterra)'s consumer, dairy ingredients and food service businesses.
Lactalis and Fonterra both currently acquire raw milk from dairy farmers in Victoria and Tasmania, as well as processing and supplying a range of dairy products across Australia.
"We looked very closely at the transaction as it will combine two of the largest buyers of raw milk in Victoria and lead to some further consolidation in Tasmania," ACCC Deputy Chair Mick Keogh said.
"While we acknowledge the concerns raised by some representative bodies, after careful consideration we have determined that the acquisition is unlikely to result in a substantial lessening of competition."
The ACCC found that across Gippsland, the Murray and Western Victoria, alternative buyers of raw milk would continue to constrain Lactalis if the acquisition proceeded.
"We found that while the industry in Tasmania is already concentrated, Lactalis has a limited presence and the acquisition would not substantially alter the market dynamics. If the acquisition proceeded, Lactalis would continue to be constrained by Saputo and, to a lesser extent, Mondelez," Mr Keogh said.
"Because Fonterra and Lactalis have differing end product mixes, they often seek to acquire milk from farmers with different production profiles. Accordingly, we found that they are not likely to be each other's closest competitors. This was reflected by analysis which showed very few farmers switched between the two processors."
The ACCC also concluded that the transaction was unlikely to substantially lessen competition in the wholesale supply of dairy products such as drinking milk, cream, cheese, chilled yellow spreads and dairy ingredients like milk powder.
The differing production focus of Fonterra and Lactalis meant that there was limited overlap between the two in the supply of these products.
For longer-life, readily transportable products such as cheese, dairy ingredients and chilled yellow spreads, the ACCC found that retailers and wholesalers would also continue to benefit from import competition.
"Supermarkets like Coles and Woolworths are also major customers in this market, with significant levels of bargaining power," Mr Keogh said.
"They also have the ability to sponsor new entry or even enter directly, as Coles has demonstrated through its acquisition of Saputo's milk processing assets."
Further information can be found on the ACCC's public register: Lactalis (BSA S.A.S.) - businesses within the Fonterra Co-operative Group.
Note
The term "chilled yellow spreads" refers to butter and other products with a similar texture and fat content, such as margarine.
The term "raw milk" refers to unpasteurised cow's milk, whereas "drinking milk" refers to milk that has been pasteurised to make it safe for human consumption.
Background
The ACCC commenced a review of the proposed acquisition on 2 May 2025. As part of the review, the ACCC consulted industry stakeholders including farmers, dairy groups, retailers and foodservice businesses.
Lactalis BSA S.A.S. is a French multinational dairy group based in Laval, France. Lactalis business activities include acquiring raw milk from farmers and processing it into dairy products and ingredients for domestic consumption and export. In Australia, it owns a range of brands such as Pauls, Vaalia, Oak, Président and Lactalis Foodservice.
Fonterra is a New Zealand-based dairy co-operative which is owned by around 8,000 New Zealand farmers. In Australia, Fonterra processes raw milk acquired from its farmers into various dairy products as part of its ingredients and consumer and food service businesses.
It owns consumer brands such as Western Star, Mainland, and Perfect Italiano, and produces certain Bega Cheese products under licence. It supplies foodservice products via the Anchor Food Professionals brand.
While the ACCC has reviewed the proposed acquisition of Fonterra's consumer, dairy ingredients and food service businesses by Lactalis, this is not an indication that Lactalis' bid will ultimately be accepted by the target business.
Whether Fonterra will ultimately accept Lactalis' bid is a matter for Fonterra.
