The Australian Competition and Consumer Commission (ACCC) has approved the merger of Lactalis Australia, a subsidiary of French dairy giant Lactalis Group, with Fonterra Australia, part of New Zealand-based Fonterra Co-operative Group. This merger involves Fonterra’s consumer, dairy ingredients, and foodservice businesses and is set to significantly impact dairy operations in Victoria and Tasmania, Australia.
The Australian Competition and Consumer Commission (ACCC) has approved a major merger between Lactalis Australia—a subsidiary of France’s largest dairy group—and Fonterra Australia, the local arm of New Zealand’s leading dairy co-operative. This approval enables Lactalis to acquire Fonterra’s consumer, dairy ingredients, and foodservice businesses, a move set to reshape the landscape of Australia’s dairy industry.
Both companies are major processors and buyers of raw milk in Victoria and Tasmania, playing critical roles in supplying a wide range of dairy products across the country.
According to ACCC Deputy Chair Mick Keogh, the regulatory body conducted an extensive review of the merger’s impact on competition. “It will combine two of the largest buyers of raw milk in Victoria and lead to some further consolidation in Tasmania,” Keogh noted. However, he emphasized that the merger was unlikely to result in a substantial lessening of competition.
The ACCC’s assessment found that in regions like Gippsland, the Murray, and western Victoria, sufficient alternative milk buyers still exist to keep competitive pressure on Lactalis. Additionally, while Tasmania’s dairy market is already concentrated, Lactalis currently holds a limited presence there, meaning the deal is not expected to significantly shift existing market dynamics.
Despite the ACCC’s decision, concerns persist within the farming community. Dairy Farmers Australia President Ben Bennett, a farmer in southwest Victoria, expressed unease about the growing concentration of power in the sector. “We’re going to see the top three dairy companies effectively control 70% of Australia’s raw milk production,” he warned.
Bennett fears the consolidation will put downward pressure on farmgate milk prices and worsen conditions for producers already struggling in a fragile industry. “We’ve been retracting over the last 20 years and this is not going to help,” he added. He also called for new players without a current footprint in Australia to enter the market and provide more competitive alternatives.
The ACCC’s ruling clears the way for the creation of a dairy powerhouse, but farmer groups and smaller processors are expected to watch closely for any shifts in pricing or supply chain access that may arise from the deal.
