Murray Goulburn's tilt at WCB 'of concern': ACCC

The ACCC says it still harbours concerns over Murray Goulburn's proposed acquisition of the hotly pursued Warrnambool Cheese & Butter company.

Competition watchdog Rod Sims has revealed that the commission still harbours concerns over Murray Goulburn's proposed acquisition of the hotly pursued Warrnambool Cheese & Butter company, warning that a tie-up could pose a risk to competition for milk supplies.

Fresh from providing clearance for Bega Cheese's proposed $400 million-plus tilt at the Warrnambool-based dairy processor this morning, the Australian Competition & Consumer Commission boss told The Australian that Murray Goulburn's large presence in Victoria's southwest posed similar cause for concern as it did in 2010 when it previously unsuccessfully bid for Warrnambool.

"The key issue is the purchase of milk off farmers; are there enough people wanting to buy their milk," Mr Sims said.

"Basically Fonterra, Murray Goulburn and Warrnambool buy about one-third of the milk and Bega is quite a small player in that market, so Bega wasn't such an issue.

"There is a bigger issue with Murray Goulburn."

And while Murray Goulburn has opted to bypass the usual approval process, and has instead chosen to go down the previously untried route of seeking public authorisation from a tribunal for its bid, the ACCC will be closely involved.

The tribunal does not have its own permanent staff and the ACCC will be required to submit a report detailing its views and any concerns about impacts to competition. Murray Goulburn has yet to submit its application and the process could take up to six months.

While the ACCC did not formally rule on Murray Goulburn's proposed acquisition of Warrnambool three years ago, it released a preliminary report outlining numerous issues of concern.

It was of the preliminary view that that the proposed acquisition would "have the effect of substantially lessening competition in the markets for the acquisition of raw milk from farmers in the southwest region of Victoria and the southeast regions of South Australia".

Warrnambool Cheese & Butter is currently the subject of a three-way bidding war. In addition to Bega and Murray Goulburn, Canada's Saputo has launched a bid for the dairy group.

Warrnambool shares are currently trading 3 cents higher at $8.39.

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