ACCC reviewing Saputo's Lion acquisition

Saputo acquisition of Lion Dairy and Drinks cheese business to be reviewed by ACCC

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UNDERSTANDING: Lino Saputo Jr says his company has a good understanding of how the ACCC evaluates proposals.

UNDERSTANDING: Lino Saputo Jr says his company has a good understanding of how the ACCC evaluates proposals.

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The Australian Competition and Consumer Commission is reviewing Saputo Dairy Australia's proposed acquisition of the cheese business of Lion Dairy and Drinks.

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The Australian Competition and Consumer Commission is calling for submissions into its review of Saputo Dairy Australia's proposed acquisition of Lion Dairy and Drinks Pty Ltd's cheese business.

The ACCC is looking at the potential impact on competition of the acquisition.

Saputo announced late in April that it had agreed to pay $280 million for the Lion assets, after Lion put the division up for sale late last year.

Saputo's proposed acquisition comprises Lion's cheese-processing facilities at Burnie and King Island and two dairy farms on King Island.

The ACCC said it was seeking views from those who might be impacted by the sale including farmers, dairy processors and buyers of cheese.

It wanted to hear from farmers about whether the sale would reduce the number of competitors for their milk.

It also wanted to know what set the offers of different processors in Tasmania apart.

"For instance, do they offer different incentives or varied contractual terms; or do particular processors only pursue particular farmers," its briefing document said.

The ACCC also wanted to hear from buyers of cheese about whether there was a distinction between everyday cheese varieties, such as block cheddar, and more specialty products, such as soft cheeses and premium hard cheeses.

Saputo's chief executive Lino Saputo Jr said late last year that the company had a better understanding of how the ACCC evaluated proposals, after its experience in acquiring Murray Goulburn.

"We have to mindful of the fact of what our size is in the region, what our milk take is not only within the country but different dairy-producing sectors," he said.

"We have a lot more knowledge today than we did even a year ago."

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The ACCC did not oppose Saputo's acquisition of MG's assets, after accepting a court-enforceable undertaking from Saputo to divest MG's Koroit plant.

The ACCC had raised concerns that Saputo owning the south-west Victorian region's two largest plants, both near Warrnambool, its current Allansford plant and Murray Goulburn's Koroit plant, would have substantially lessened competition for the purchase of raw milk in the region, leading to farmers being paid less at least in the medium term.

The ACCC is seeking submissions May 30.

This story first appeared on Australian Dairyfarmer

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