ACCC gives all clear to Bega-Kraft deal
The Australian Competition and Consumer Commission has given approval to Bega to acquire Kraft Foods’ cheese manufacturing plant located at Strathmerton, Victoria, and enter into a supply agreement with Kraft.
Under the new ten-year supply arrangement Bega Cheese will manufacture, pack and supply to Kraft those products currently produced at the Strathmerton plant.
“At the manufacturing level, the ACCC concluded that the proposed acquisition was unlikely to substantially lessen competition, compared to the likely counterfactual in which Kraft continued to manufacture processed cheese,” the competition regulator said. “In reaching this conclusion, the ACCC had regard to the low barriers to expansion for existing processed cheese manufacturers, the ability of wholesale customers to source imported processed cheese products, particularly from New Zealand, and the existence of an independent domestic manufacturer providing a price competitive alternative.”
“In relation to wholesale supply, the ACCC also concluded that the proposed acquisition was unlikely to substantially lessen competition, noting that with or without the proposed acquisition Kraft will continue to compete as a wholesale supplier of processed cheese.”
The multi-million dollar agreement, which will create 150 new jobs, was announced in December.
Bega Cheese will provide cheese cutting, packaging and processing expertise and capacity for Kraft’s Australian and New Zealand business, while committing to add significant volume to the Strathmerton site from both its existing export business and through new product development.
Bega Cheese Executive Chairman, Barry Irvin, described the agreement as a “win win” situation for both companies, when it was initially announced.
“The Strathmerton agreement lays the platform for co‐operative growth for both Bega Cheese and Kraft Foods,” he stated. “We are looking forward to operating this globally significant manufacturing facility which adds to our existing capabilities at Bega. It will strengthen both Kraft and Bega Cheese’s positions as leaders with the Australian cheese industry.”
The alliance of the two companies could result in Strathmerton becoming Australia’s largest processed cheese plant.
The factory processes 22,000 tonnes of product a year, which the company plans to increase to 55,000 tonnes in the next five years – 20,000 tonnes of which will be exported.