National Foods proposed the section 87B undertaking (undertaking), in anticipation of ACCC concerns about the impact that the proposed acquisition may have on:
the acquisition of raw milk in central NSW and SA
the NSW and SA markets for the wholesale of fresh white milk
the NSW and SA markets for the wholesale of flavoured milk.
Broadly, the undertaking:
divests two milk processing facilities (Lidcombe NSW and Clarence Gardens SA)
grants licences for a range of National Foods’ and Dairy Farmers' white and flavoured milk brands
transfers/assigns depots and distribution agreements
agrees to supply raw milk for the first 12 months.
The key difference between the approaches in the two states is that in NSW, the licences for fresh white milk will be transferred to the approved purchaser for a period of two years while in SA the licensing arrangement will be perpetual.
The undertaking adequately addresses competition concerns with the acquisition of raw milk and the supply of fresh white and flavoured milk in NSW and SA. The approved purchaser will be a viable stand-alone competitor able to compete for private label milk contracts and in the provision of branded fresh white and flavoured milks.
A Public Competition Assessment will be issued in relation to the proposed acquisition.
