Bega throws hat in the ring for Fonterra Acquisition

Another dairy giant has thrown their hat in the ring to acquire Fonterra’s assets, with Australia’s competition watchdog starting an investigation into a joint bid by Bega and Dutch-based multinational company FrieslandCampina NV.

As announced in May last year, Fonterra is selling off its Oceania division - which comprises consumer, food services and ingredients businesses including big-name NZ-based brands such as Mainland cheese, Anchor milk and butter and Kapati yoghurt; as well as popular Australian dairy lines such as Perfect Italiano cheese and Western Star butter. Also up-for-grabs are the company’s eight milk processing sites in Australia, three in NZ and two distribution centres across the Tasman.

As part of its investigation into the potential impacts of this acquisition, the Australian Competition and Consumer Commission is seeking feedback from dairy farmers and processors on whether the sale would reduce competition in sourcing raw milk, supplying processing services, and wholesaling dairy products.

Bega and Fonterra already compete in multiple parts of the supply chain, including sourcing milk from farmers in Victoria, Tasmania, NSW, and South Australia.

Bega, which buys 1.3 billion litres of milk annually, says the acquisition would improve efficiencies and benefit farmers, but Australian Dairy Farmers (ADF) has warned such a merger could reduce competition and bargaining power for farmers - especially in key dairy regions.

In addition to Bega, France’s Lactalis Group and Japanese food giant Meiji Holdings are also bidding for the Fonterra business.

The ACCC has already given France’s Lactalis bid the green light in a decision that drew criticism from the ADF.

ADF President Ben Bennett warned that processor consolidation reduces competition, leaving farmers with fewer choices and weaker bargaining power, especially in key regions like Victoria and Tasmania. “That’s a major threat to farmgate prices, especially in a shrinking milk pool,” he said.

The ADF has called for enforceable undertakings to protect farmers if any deal proceeds, including preserving milk supply freedom, honouring existing contracts, keeping key processing sites open, and conducting regular compliance audits under the Dairy Code of Conduct.

Public submissions on the Bega proposal are open as the ACCC weighs whether the deal can proceed without harming competition or farmgate prices.