Coles’s Proposed Acquisition Raises Concerns about Dairy Industry

Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), has expressed concerns over supermarket operator Coles’s proposed acquisition of two milk-processing plants from Saputo. This acquisition could potentially impact the long-term viability of dairy processors and farmers in the industry.

The ACCC noted that Coles’ acquisition would bring about a significant structural change to the dairy processing sector as it would be the first time a supermarket operator owns and operates its own milk-processing facilities. One of the preliminary concerns raised by the ACCC is that Saputo might cease acquiring milk in New South Wales (NSW) following the divestment.

ACCC Deputy Chair Mick Keogh emphasized that this could result in limited competition in certain regions of NSW, leading to lower prices for raw milk received by farmers. Additionally, industry participants are worried that Coles would consolidate its private-label milk production, thereby increasing its bargaining power with processors and wholesalers. This reduced competition at the wholesale level could have adverse effects on the long-term viability of processors, which in turn would impact farmers.

Coles is already the largest customer for Saputo’s facilities in Laverton North and Erskine Park, and they also supply other milk products to various retailers.

In conclusion, the proposed acquisition by Coles has raised concerns about the future of the dairy industry, particularly regarding the viability of processors and the livelihoods of farmers. The ACCC will continue to assess the situation and its potential impact on competition and fair pricing within the market.

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