The ACCC will not oppose the proposed acquisition of Lion Dairy & Drinks Pty Ltd (Lion D&D) by China Mengniu Dairy Company Ltd (Mengniu) after closely considering the potential impact on competition.
Mengniu is proposing to acquire Lion D&D’s raw milk processing facilities in Australia, two of which are located in Chelsea and Morwell in Victoria.
The ACCC’s investigation examined whether the proposed acquisition would have an impact on competition for the purchase of raw milk from dairy farmers in the Gippsland region. Gippsland is the only area which has processing facilities ultimately owned by both Lion D&D and Mengniu.
Mengniu, through a subsidiary, has an indirect interest in Burra Foods Pty Ltd, which has an existing raw milk processing facility located at 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 also found that there was considerable spare processing capacity at other raw milk processors in the Gippsland region, giving farmers alternative potential buyers for their milk.
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Background
Mengniu is a Chinese dairy company listed on the Hong Kong Stock Exchange. A subsidiary of Mengniu owns a 43.35 per cent minority interest in Inner Mongolia Fuyuan International Industrial (Group) Co., Ltd, which in turns owns 51.35 percent of Burra.
Burra is an Australian producer and wholesale distributor of dairy products. It has one raw milk processing facility located at Korumburra in Gippsland, Victoria.
Burra processes, manufactures and distributes a variety of dairy ingredients, including:
- milk powders, including cream powder, instant milk powder, skim milk powder, and nutritional milk powders,
- food preparation products (for example, cream cheese, frozen cheese, concentrated milk preparations, frozen milk concentrate, skim cheese and milk protein and fat blends), and
- bulk liquids including fresh milk, cream and milk concentrates, supplied to domestic manufacturers of ice-cream, yoghurt and cream.
Lion D&D is part of a food and beverage business owned by Kirin.
Lion D&D has two raw milk processing facilities located in or near the Gippsland region in Chelsea and Morwell. These facilities produce fresh drinking milk, flavoured drinking milk, fresh cream, yoghurt, sour cream and dairy desserts.
