Canadian dairy giant Saputo is preparing to sell the Koroit dairy processing plant in western Victoria, as part of its $1.3 billion acquisition of Murray Goulburn.
The Australian Competition and Consumer Commission on March 1 said the Koroit plant would need to be sold if Saputo wanted to acquire the struggling Australian dairy firm.
“Our view is that Saputo owning the Koroit plan would substantially lessen competition for the acquisition of dairy farmers’ raw milk in the region,” ACCC chairman Rod Sims said.
Murray Goulburn, Saputo and Fonterra are the existing milk buyers in the region. There is concern from the competition watchdog that the effective merger of two of these buyers would lower prices for farmers.
“When Murray Goulburn dropped its prices in 2015-16, Fonterra was quick to follow,” Sims explained. “Our analysis has shown that many farmers switched to Saputo in response, the only other major processor nearby. We are concerned this transaction would ultimately lead to lower prices being paid to dairy farmers in the region.”
Names so far brought up about potential buyers for the Koroit plant include Bega, Yili, Burra Foods and Australian Consolidated Milk.
Koroit is capable of processing up to 800 million litres of milk per annum, but currently operates at well below that rate.
The ACCC is still inviting submissions for its review of Saputo’s Murray Goulburn acquisition, with a final decision due by March 29.