Lactalis-Fonterra Dairy Deal Gets ACCC Green Light — What It Means for Aussie Businesses

Published: 10 July 2025

By Bane Legal Services — Australia’s Trusted Legal Matchmaker for Business Owners

The Australian Competition and Consumer Commission (ACCC) has announced it won’t oppose French dairy giant Lactalis’ proposed acquisition of Fonterra’s Australian consumer, dairy ingredients and food service operations.

It’s a significant move in Australia’s $4 billion dairy industry — and one that could reshape how raw milk is bought and how dairy products are distributed across the country. But the ACCC, after consulting with farmers, industry groups, retailers and foodservice businesses, found that the deal is unlikely to substantially lessen competition.

Source: ACCC Media Release, 10 July 2025

Read the original release

What’s the deal?

Lactalis (the company behind Pauls, Oak, Vaalia and Président) is aiming to take over Fonterra’s Australian operations — including brands like Western Star, Mainland and Perfect Italiano, plus its foodservice division Anchor Food Professionals.

Both companies buy raw milk from Australian farmers (especially in Victoria and Tasmania) and produce a wide range of dairy products, including:

• Drinking milk

• Cream

• Cheese

• Butter and margarine (chilled yellow spreads)

• Milk powder and other dairy ingredients

At first glance, a merger of this size might raise eyebrows. But the ACCC says the overlap between the two companies isn’t as significant as it might seem.

Why the ACCC didn’t oppose the deal

According to ACCC Deputy Chair Mick Keogh, while the acquisition brings together two large milk processors, it’s not expected to reduce competition for farmers or retailers.

Here’s why:

• Different product focuses – Lactalis and Fonterra don’t compete head-to-head in all categories.

• Different farmer supply profiles – They tend to buy milk from different types of producers.

• Limited switching – Most farmers don’t move between the two, suggesting they’re not direct rivals.

• Strong supermarket power – Coles and Woolworths still hold major bargaining power, with Coles even entering the processing space through its acquisition of Saputo’s assets.

• Import competition – Products like cheese and dairy ingredients are easily imported, keeping pressure on local players.

Even in Tasmania, where market concentration is higher, Lactalis’ limited presence means the acquisition won’t significantly change competitive dynamics. Other players — like Saputo and Mondelez — will continue to act as a check on market power.

What it means for business owners

Whether you’re a dairy farmer, a food distributor, a franchised café operator or a foodservice brand — this deal signals a few things:

• Consolidation continues in agribusiness and food supply chains.

• The ACCC is paying close attention to rural competition and bargaining power.

• Strategic acquisitions can still pass regulatory scrutiny — if they’re well structured.

However, this ruling doesn’t guarantee the deal will go ahead. Fonterra still needs to decide whether to accept Lactalis’ offer.

Legal implications? Commercial questions? We can help.

At Bane Legal Services, we don’t give legal advice — but we know the commercial landscape, and we know the right lawyers to connect you with.

Whether you’re:

• Considering a merger or acquisition

• Supplying to (or competing with) supermarket giants

• Reviewing supplier or processor contracts

• Navigating complex agribusiness regulations

…we’ll introduce you to a lawyer who understands your world — not just the law.

With over 30 years of experience in business and franchising, we help clients find legal specialists who match their commercial goals.

Need a referral to a commercial, agribusiness or competition lawyer?

Let’s talk — and we’ll connect you with someone who speaks your language.

Disclaimer: This article is general information only and does not constitute legal advice. Bane Legal Services is not a law firm. We help business owners connect with qualified lawyers who specialise in commercial, franchise, and competition law.