The Australian Competition and Consumer Commission (ACCC) will not oppose Lactalis BSA S.A.S.’s proposed acquisition of Fonterra Co‑Operative Group’s consumer, dairy ingredients and food service businesses, the regulator announced on Friday.
Both companies currently buy raw milk from farmers and process a range of dairy products in Victoria and Tasmania. The ACCC said it examined the deal closely because it would combine two of the largest raw‑milk buyers in parts of Victoria and lead to “some further consolidation in Tasmania”.
“We looked very closely at the transaction as it will combine two of the largest buyers of raw milk in Victoria and lead to some further consolidation in Tasmania,” ACCC Deputy Chair Mick Keogh said. “While we acknowledge the concerns raised by some representative bodies, after careful consideration we have determined that the acquisition is unlikely to result in a substantial lessening of competition.”
The regulator found that in Gippsland, the Murray and western Victoria, other processors would continue to provide competitive constraint on Lactalis if the deal went ahead. It also concluded that the takeover was unlikely to substantially reduce competition in the wholesale market for products such as drinking milk, cream, cheese, chilled yellow spreads and dairy ingredients including milk powder, noting limited product overlap between the two groups.
“We found that while the industry in Tasmania is already concentrated, Lactalis has a limited presence and the acquisition would not substantially alter the market dynamics. If the acquisition proceeded, Lactalis would continue to be constrained by Saputo and, to a lesser extent, Mondelez,” Mr Keogh said.
“Because Fonterra and Lactalis have differing end product mixes, they often seek to acquire milk from farmers with different production profiles. Accordingly, we found that they are not likely to be each other’s closest competitors. This was reflected by analysis which showed very few farmers switched between the two processors.”
For longer‑life and easily transportable products such as cheese, some chilled spreads and dairy ingredients, the ACCC said import competition would remain a constraint on prices and supply. It also pointed to the bargaining power of major supermarket chains.
“Supermarkets like Coles and Woolworths are also major customers in this market, with significant levels of bargaining power,” Mr Keogh said. “They also have the ability to sponsor new entry or even enter directly, as Coles has demonstrated through its acquisition of Saputo’s milk processing assets.”
The ACCC began its review on 2 May 2025 and consulted farmers, dairy industry groups, retailers and foodservice businesses as part of its assessment.
Lactalis is a French multinational that buys raw milk from Australian farmers and produces brands including Pauls, Vaalia, Oak, Président and Lactalis Foodservice. Fonterra is a New Zealand cooperative owned by about 8,000 farmers; in Australia it sells brands such as Western Star, Mainland and Perfect Italiano, produces certain Bega Cheese products under licence and supplies foodservice products under the Anchor Food Professionals brand.
The ACCC’s decision not to oppose the transaction does not guarantee the sale will proceed. Whether Fonterra accepts Lactalis’s bid is a matter for Fonterra.
Further details are available on the ACCC public register.
