ACCC approves Mengniu-Lion deal

Tuesday, 25 February, 2020

ACCC approves Mengniu-Lion deal

The ACCC has given the Mengniu Dairy Company the green light to acquire Lion Dairy & Drinks, after considering the potential impact on competition for the purchase of raw milk in the Gippsland region. Gippsland is the only area which has processing facilities owned by both Lion D&D and Mengniu. Mengniu is set to acquire Lion D&D’s raw milk processing facilities in Australia, two of which are located in Chelsea and Morwell in Victoria.

Lion D&D and Mengniu both own processing facilities in the Gippsland region, as Mengniu has an indirect interest in acquiring Burra Foods through a subsidiary. Burra Foods operates a raw 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. The level of aggregation from the proposed acquisition will be relatively low, with Burra and Lion D&D combined acquiring less than 25% 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,” said Mick Keogh, Deputy Chair of the ACCC.

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. Lion D&D produces brands including Dairy Farmers, Pura, Farmers Union Iced Coffee, Dare and Big M. Lion D&D announced plans to sell the business to Mengniu in 2019, in a deal that included all white milk, milk-based drinks, water, juice, yoghurt, and water brands and assets.

Image credit: ©viperagp/Dollar Photo Club

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