AUSTRALIA – Australia’s Competition Regulator, the Australian Competition and Consumer Commission (ACCC), has deferred its decision on the proposed acquisition of two milk processing facilities by local supermarket giant Coles.

The delay came as the regulator continues to gather feedback from concerned parties who have raised significant apprehensions regarding the Coles-Saputo deal.

Coles, the country’s second-largest supermarket chain, had announced its intentions in April to purchase two milk processing plants from the Canadian dairy giant Saputo.

The deal, valued at U$70.2 million covers sites located in Laverton North, Victoria, and Erskine Park, New South Wales.

The ACCC initiated a review of the acquisition in May and subsequently published its preliminary findings in July.

Parties involved were granted until August 3 to respond to these initial observations. However, as of the scheduled decision date of September 14, the ACCC has not reached a conclusion.

The ACCC’s timeline of proceedings indicated that the regulator is still awaiting crucial information from the concerned parties and will announce a new submission deadline in due course.

The feedback received from various stakeholders in July indicated that the acquisition could result in a significant structural change within Australia’s dairy sector.

If approved, this transaction would mark the first instance of a supermarket owning and operating its own milk processing facilities, according to the regulator.

Meanwhile, Coles procures raw milk from farmers in Victoria and New South Wales and processes it at these plants under a pre-existing arrangement with Saputo.

Concerns have been raised about how this acquisition may alter Saputo’s incentives to continue acquiring raw milk in New South Wales. Such a shift could potentially reduce competition in specific regions of the state, ultimately impacting raw milk prices for farmers.

Mick Keogh, the Deputy Chair of ACCC, expressed these concerns in July, emphasizing that Coles could gain increased bargaining power, potentially leading to diminished competition at the wholesale level, adversely affecting both processors and farmers.

“Numerous industry participants have voiced apprehensions that the acquisition might enable Coles to consolidate its private-label milk production, further bolstering its negotiating leverage with dairy processors and wholesalers,” he noted.

Coles, however, remains committed to addressing these concerns and collaborating with the ACCC. Leah Weckert, CEO of Coles, reassured stakeholders that the supermarket giant does not anticipate any adverse effects on market competition.

“Coles already acquires approximately 80% of the volumes at the facilities and will provide milk processing services to Saputo Dairy Australia under a tolling arrangement,” Weckert stated.

“We remain confident that any outstanding concerns can be addressed so that the proposed transaction can proceed to completion.”

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