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The Australian Competition and Consumer Commission (ACCC) has initiated an informal review of Bega Cheese Limited's proposal to acquire certain consumer and dairy ingredient businesses from New Zealand-based Fonterra Co-operative Group.

This acquisition comes as part of a broader divestment strategy initiated by Fonterra last year, aimed at streamlining its operations and focusing on core areas of its business.

Bega Cheese, a key player in the Australian dairy sector, has expressed its intent to acquire Fonterra's operations within Oceania, which includes its Australian businesses.

The bid is notable not only for its potential market impact but also because it involves FrieslandCampina, a Dutch multinational dairy company, which is partnering with Bega to acquire segments of Fonterra's global operations outside Oceania.

The ACCC's review will focus on potential competitive concerns arising from the acquisition. Specifically, the commission is examining whether the merger could significantly reduce competition in key areas of the dairy supply chain, including:

• Raw milk acquisition: Both companies are major purchasers of raw milk from Australian dairy farmers, particularly in Victoria, Tasmania, and parts of New South Wales and South Australia.

  
  

• Milk processing and production: The overlap extends to the processing of milk into various dairy products such as cheese, butter and cream, as well as dairy ingredients including milk powders.

  
  

• Supply to retail and foodservice: The merger may affect the wholesale supply of dairy products and ingredients to retailers and foodservice operators, raising questions about pricing and availability.

Bega Cheese, founded in 1899 and headquartered in New South Wales, is one of Australia's largest milk processors, with an annual intake of approximately 1.3 billion litres of raw milk. The company's revenue for FY24 was reported at $3.52 billion, underscoring its significant role in the industry.

Fonterra, on the other hand, operates as a co-operative owned by around 8,000 New Zealand farmers and has a substantial presence in the Australian market, employing around 1,500 staff and processing milk from approximately 650 farmers. Its product range includes brands like Mainland and Western Star.

The ACCC is actively seeking input from industry stakeholders on the implications of the proposed acquisition. Interested parties are encouraged to submit their views by August 15, 2025.

The commission will assess the potential effects on competition in the dairy market, considering factors such as pricing dynamics and the availability of alternatives for both suppliers and consumers.

As the review progresses, the ACCC aims to ensure that any outcomes align with maintaining a competitive marketplace that benefits both producers and consumers in the dairy sector.

The provisional date for announcing the ACCC's findings is set for September 25, 2025.