The Commerce Commission has cleared Fonterra to acquire the dairy processing assets of New Zealand Dairies.
Waimate milk processor New Zealand Dairies was placed in receivership in May owing a substantial amount to its supplier farmers. Its factory produces milk powder solely for export markets.
"The Commission is satisfied that the acquisition would not be likely to result in a substantial lessening of competition," chairman Mark Berry said.
Fonterra's co-operative ownership structure and the regulatory environment it operates in, together with its national raw milk pricing strategy, removed its incentive and ability to depress the prices it pays South Canterbury and North Otago farmers, he said.
Given that the Studholme factory produces milk products for export rather than domestic consumption, the Commission has not had to consider downstream markets in New Zealand for dairy products such as butter and cheese in this instance, Berry added.
Fonterra acquires and processes about 90 per cent of the raw milk produced by New Zealand's dairy farmers.
It has agreed with the receivers of New Zealand Dairies to fund and operate the New Zealand Dairies factory during the 2012/2013 milking season.
- © Fairfax NZ News
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