The Australian Competition and Consumer Commission has re-authorised Dairy Farmers Milk Co-operative (DFMC) to enter into back to back milk purchasing and pricing arrangements.
DFMC and Dairy Farmers Pty Ltd (Lion) are authorised to enter into a Milk Supply Agreement, which sets terms whereby DFMC’s acquisition of milk from approximately 600 of its members is on the same terms as Lion’s acquisition of milk from DFMC.
DFMC is an independent farmer-owned cooperative that uses its collective milk volume, capital and membership to manage mutually beneficial milk supply agreements.
In October 2008, the ACCC granted DFMC authorisation until 13 November 2013 for arrangements between DFMC, DFMC farm members and Australian Co-operative Foods Limited (now Lion).
The ACCC has not received any submissions raising competition concerns from industry participants since the 2008 authorisation was granted.
“The ACCC considers that the milk supply arrangements will result in further cost savings and greater certainty of supply,” ACCC Deputy Chair Dr Michael Schaper said.
“The agreement will have limited detriments as Lion will still be able to acquire milk from other suppliers.”
The ACCC has now re-authorised the back to back milk purchasing arrangements for ten years.
Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.