Australia’s competition watchdog has voiced concerns over Murray Goulburn’s proposed acquisition of Warrnambool Cheese and Butter Factory.
In a statement of issues released today (22 April), the Australian Competition and Consumer Commission (ACCC) said warned that the deal could potentially lessen competition in some markets for raw milk.
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“The ACCC is concerned that the proposed acquisition would substantially lessen competition for the acquisition of raw milk from farmers in the relevant markets within South Australia and Victoria,” the ACCC said.
“The potential effects in the relevant markets include a significant reduction in farm-gate prices paid to farmers for raw milk; and reduced competition in the offer of non-price terms such as finance, field advice services and discounted hardware and grain supplies.”
The ACCC suggested that WCB provides Murray Goulburn with “strong competitive constraint” in these markets.
“The ACCC’s market inquiries suggest that many farmers benefit from the competition between WCB, Murray Goulburn and their competitors, including the receipt of tangible financial benefits from price competition and other non-price benefits,” the regulator said.
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By GlobalDataIt added that the removal of WCB would result in a permanent change to the structure of the relevant markets and competitive dynamics.
The ACCC has invited further submissions to its statement of issues by 7 May.
WCB has repeatedly rejected Murray Goulburn’s takeover advances, arguing that the deal would not serve the best interests of its farmer suppliers and that the offer undervalues the company.
Murray Goulburn has built up a 10% stake in WCB through on-market purchases.
