ACCC is still investigating Coles' plans to move into fresh milk processing

EastAUSmilk, which represents Dairy Connect in NSW and the Queensland Dairyfarmers' Organisation, has gone public with its objections, claiming it would be put too much market power in the supermarket giant's hands.

The Australian Competition and Consumer Commission expects to make a decision on its review of the proposal late in July.

The ACCC has closed off submissions on the proposed $105 million sale and EastAUSmilk has made its submission public.

Coles wants to buy fresh milk processing facilities at Laverton North, Victoria, and Erskine Park, NSW.

EastAUSmilk chief executive Eric Danzi called on the ACCC to block Coles' aims of becoming both retailer and processor.

"We believe, like many dairy industry stakeholders including farmers and processors, if the Coles acquisition is approved it will substantially lessen competition in the market," Mr Danzi said.

"It would give Coles the ability to destroy processors, processor brands and farmers by completely controlling the supply chain."

Mr Danzi said his group would also approach the federal government "to ask them to intervene".

The two dairy plants targeted by Coles were built by Murray Goulburn as part of its ill-fated push into the Australian domestic fresh milk market.

Saputo bought Murray-Goulburn in 2018 for $1.31 billion.

The Laverton North facility cost $80 million and was opened in 2014, while the Erskine Park plant cost $60 million and was opened in 2015.

Coles CEO Steven Cain said the new facilities would improve security of its milk supply chain.

"These facilities also have sufficient capacity to facilitate further growth opportunities through new product innovation," he said.

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Each facility has the capacity to process around 225 million litres a year.

They are predominantly used to process Coles Own Brand two-litre and three-litre milk.

Saputo has been struggling, as have many other milk processors, to secure enough milk supply from Australian farmers.

Saputo announced last year it would close its Maffra factory in East Gippsland and "streamline activities" at its plants in Leongatha in West Gippsland and Mil-Lel, near Mount Gambier in South Australia.

Saputo chair and CEO Lino Saputo said the company was continually working to ensure it had the right manufacturing footprint and product offering to enhance its position as "a high-quality, low-cost processor".

The 48 Saputo employees at the two plants to be bought by Coles were to be offered employment contracts with the supermarket.

Saputo's fresh milk products - including Devondale milk - will be continue to be processed at these two plants.

Saputo said it would continue to collect and process milk throughout Victoria, NSW and Tasmania.

The ACCC said its current investigation was focused on the impact of the proposed sale on competition.

That investigation included:

The impact on prices or terms of supply farmers receive for their raw milk in NSW and Victoria.

The impact on prices for fresh milk processing services in NSW and Victoria.

Whether the proposed acquisition is likely to give Coles the ability and/or incentive to foreclose other dairy processors, wholesalers or retailers.