Canadian dairy giant, Saputo, says it is looking at a possible sale of the Koroit dairy factory in south western Victoria following pressure from the national competition watchdog.
Saputo is currently in the throes of buying the Koroit plant – one of seven sites being sold by the financially troubled Murray Goulburn dairy co-operative.
However, the Australian Competition and Consumer Commission (ACCC) is concerned Koroit is less than 30 kilometres from Saputo's massive Warrnambool Cheese and Butter (WCB) plant at Allansford.
Owning both sites may have a negative effect on competition for farmer's milk in the area according to the competition regulator.
The ACCC calculated Saputo’s WCB plant and MG’s Koroit factory would have more than two thirds of the raw milk processing capacity in south western Victoria and the south eastern South Australian region.
The Koroit factory is the only hurdle the ACCC said it could see, so far, preventing its approval of the massiv $1.3 billion MG asset sale to Supoto.
Last week ACCC agricultural commissioner, Mick Keogh, said finding another buyer for Koroit was one option MG and Saputo needed to consider.
He expected formal and informal discussions with the ACCC would follow as a result of the concerns being raised.
Saputo has responded flagging it is now talking to the ACCC “in respect of a divestment plan for the Koroit dairy plant in order to address the ACCC concerns and to obtain the ACCC clearance”.
"Saputo will continue to work closely with Murray Goulburn and the ACCC to seek approval of the proposed acquisition," the Canadian cheese giant said in a statement.
MG has noted Saputo’s official response, saying it was continuing to work closely with Saputo and the ACCC to conclude the asset sale.
The ACCC is expected to make a final decision by March 29.