The ACCC is currently undertaking a review of the proposed acquisition of two Saputo processing plants in NSW and Victoria by Coles.
EastAUSmilk has this week put in a submission to ACCC outlining that competition would be significantly reduced by Coles becoming a processor and therefore the ACCC must block this purchase.
We believe, like many dairy industry stakeholders including farmers and processors, if the Coles acquisition is approved it will substantially lessen competition in the market.
EastAUSmilk believes the impact on competition from this proposed acquisition is vastly different and far greater than one processor acquiring another processor's facilities.
It would give Coles the ability to destroy processors, processor brands and farmers by completely controlling the supply chain.
It would allow Coles to abuse its power to completely control and destroy the market and its competitors.
If approved, the northern dairy industry would be under significant threat including farmers, processors and retailers.
Some Saputo suppliers are very concerned that this acquisition could have detrimental effects on Saputo. It could cause Saputo to exit the industry or at least some regions which would have a substantial impact on competition. This would cause competition to decrease.
For the first time a processor would set the wholesale and retail price of their products. And alarmingly, a processor for the first time would be setting the wholesale and retail price of all their competitors.
This would allow Coles to dictate the viability of all processors and their brands. Given the history of Coles destroying processor and farmer margins and viability historically, it is to be expected that they would do the same again.
EastAUSmilk will discuss our concerns with the federal government and ask them to intervene to block this proposed acquisition. We would like to see government impose a substantial lessening of market power in the supply chain from Coles, not let them further increase their power.
