- Australia’s ACCC has not opposed Lactalis’ proposed acquisition of Fonterra’s global consumer and Australian dairy businesses, citing minimal market overlap and limited competition concerns.
- While the deal is not yet finalized, the informal review outcome boosts Lactalis’ chances amid interest from other global players like Saputo and Meiji.
- With Australia’s stricter merger laws taking effect in 2026, Fonterra may be incentivized to close a deal soon to avoid regulatory hurdles and maximize shareholder value.
Lactalis’ efforts to buy Fonterra’s global consumer and integrated businesses have been given a huge boost – but a formal deal between the two dairy majors is far from complete.
On July 10, Australia’s competition authority (ACCC) said it would not oppose Lactalis’ proposal because a deal would not negatively impact competition.
The ACCC found only ‘limited’ overlap between the two dairy companies’ markets and noted that Lactalis would still face competition from domestic processors in segments such as cheese, cream, liquid milk and spreads.
The regulator also found that Fonterra and Lactalis do not closely compete for raw milk supply – adding that each targets different farms, with Lactalis requiring a more constant supply throughout the year and Fonterra more likely to source milk at peak production times, e.g. spring.
Does this mean Lactalis will acquire Fonterra’s assets?
The ACCC’s ruling marks a major milestone in one of dairy’s most closely-watched M&A sagas – but it’s not a formal approval of a merger agreement.
The regulator’s decision formed part of an informal merger review – a voluntary process designed to allow the regulator to check if a deal is likely to lessen competition.
But most mergers in Australia are given the go-ahead following the informal phase – with only deals that ‘substantially’ harm competition being flagged for further review or blocked.
All this suggests that Lactalis stands a good chance to formally acquire Fonterra’s Mainland Group – which is how the entity that combines the New Zealand co-op’s global consumer and Australian dairy ingredients and foodservice divisions is now known.
Would Fonterra strike a deal with Lactalis?
But Fonterra’s for-sale assets have received interest from global business players – including Canada’s Saputo, Japan’s Meiji Holdings, US equity firm Warburg Pincus and Australian dairy company Bega. The co-op is also considering the possibility of an IPO.
All this puts Fonterra in a favorable position to consider which deal would serve its interests best – with the biggest priority being maximizing value for its farmer shareholders.
Despite facing competition from other dairy majors globally, Lactalis may still have an advantage.
The ACCC ruling demonstrates a deal is likely to succeed – and no other interested party has undergone this voluntary process yet.
While jumping through such hoops is not required to successfully strike a deal for Mainland Group, it does take some of the guesswork out.
Will Australia’s merger laws force Fonterra’s hand?
There is another factor to consider: with Australia’s incoming merger laws, set to be implemented next year and tighten the government’s merger activity oversight, there’s an incentive for Fonterra to complete the transaction – which is bound to be lucrative – sooner rather than later.
From January 1, 2026, Australia’s new mandatory merger control process will kick off. The policy is designed to strengthen compliance and tackle unfair competition; with transactions that meet certain financial thresholds required to gain ACCC’s approval prior to completion – irrespective of their impact on competition.
This will mean more red tape and higher compliance costs for businesses, on top of broadening what a ‘substantial’ lessening of competition means.
From 2026, mergers that meet the following thresholds would be subject to mandatory ACCC approval:
- the combined Australian turnover of the merger parties (including the acquirer group) is at least AU $200 million (USD135 million); and either the Australian turnover is at least AU $50 million (USD33 million) for each of at least two of the merger parties; or if the global transaction value is at least AU $250 million (USD167 million); OR
- the acquirer group’s Australian turnover is at least AU $500 million (USD335 million); and either the Australian turnover is at least AU $10 million (USD6.5 million) for each of at least two of the merger parties; or if the global transaction value is at least AU $50 million (USD33 million). (Source: White & Case LLP)
We have approached Lactalis and Fonterra for official comment.