Australia: Regulator concerned over Saputo buying cheese business

The Australian Competition and Consumer Commission (ACCC) has preliminary competition concerns about dairy company Saputo’s proposed acquisition of the Tasmanian-based cheese business of competitor Lion Dairy & Drinks.

Saputo owns a milk processing plant in Smithton, Tasmania. It proposes to acquire Lion’s Tasmanian cheese processing plants, located in Burnie and King Island, as well as Lion’s cheese brands, including South Cape, King Island Dairy, and Tasmanian Heritage.

The proposed acquisition would combine processing plants of the second and third biggest buyers of raw milk in Tasmania, which currently compete separately with the biggest buyer, Fonterra.

“We are concerned that combining these two operators may lead to Tasmanian dairy farmers being paid lower prices for their raw milk,” ACCC Deputy Chair Mick Keogh said.

“If Saputo acquires the Burnie and King Island Lion plants, we will be left with a structure where two companies, Fonterra and Saputo, buy more than 80 per cent of the raw milk produced in Tasmania.”

“Each would have a market share several times bigger than the next largest buyer of raw milk, Mondelez-Cadbury,” Mr Keogh said.