National Foods cleared to continue Dairy Farmers’ milk supply agreement

Posted by Isobel Drake on 24th October 2008

Milk deal

The Australian Competition and Consumer Commission has granted final authorisation for the continuation of milk pricing and milk purchasing policies between Dairy Farmers Milk Co-operative (DFMC) Limited and Australian Cooperative Food Limited (ACF) following the sale of ACF to National Foods.

DFMC acquires raw milk from its farmer members and sells this milk to ACF for processing into dairy products.

National Foods proposed a $910m takeover of ACF in August, which received the approval of both the ACF and DFMC Boards in the absence of a superior offer. The deal is still pending shareholder approval, with results of the Dairy Farmers vote expected to be announced by the end of November.

The current policies require DFMC to adopt the same price and purchasing arrangements in relation to the purchase of raw milk from its farmer members as ACF applies to its purchase of raw milk from DFMC.

“Following a public consultation process, the ACCC considers that the continuation of the existing pricing and purchasing policies following the sale of ACF will result in a public benefit in the form of transaction cost savings and efficiency gains for DFMC farmers and ACF,” ACCC Chairman, Mr Graeme Samuel, said yesterday. “The ACCC also considers the continuation of the policies will provide certainty of supply arrangements, particularly for DFMC farmer members.”

The ACCC has granted authorisation for a period of five years.

The ACCC’s final determination will be available by following the Public Registers and Authorisations Registers links on the ACCC’s website, www.accc.gov.au.