Australia’s competition watchdog has given China’s Mengniu Dairy the all clear to acquire Lion Dairy & Drinks after initial concerns that the deal could impact competition for the purchase of raw milk in the Gippsland region.
Lion struck a deal with China Mengniu Dairy in November to sell its Dairy & Drinks business for $600 million.
Mengniu will acquire Lion D&D’s raw milk processing facilities, two of which are located in Chelsea and Morwell in Victoria. Gippsland is the only area which has processing facilities ultimately owned by both Lion D&D and Mengniu.
Mengniu has an indirect interest in Burra Foods Pty Ltd, which has a milk processing facility in Korumburra, Victoria.
“While Burra and Lion D&D compete for the acquisition of raw milk, they are not close competitors, and our investigations concluded that dairy farmers are unlikely to switch between the two,” ACCC Deputy Chair Mick Keogh said.
“The level of aggregation from the proposed acquisition will be relatively low, with Burra and Lion D&D combined acquiring less than 25 per cent of raw milk in Gippsland. Two other large raw milk buyers remain in the Gippsland region, Saputo and Fonterra, as well as some smaller processors.”
The ACCC found that there was considerable spare processing capacity at other raw milk processors in the Gippsland region, giving farmers alternative potential buyers for milk.
The sale also includes all of D&D’s milk, milk-based beverages, yoghurt, juice and water brands, as well as its international business, its share of joint ventures Vitasoy Australia Products and Capitol Chilled Foods Australia and the licensing agreement for Yoplait.