The undertakings to the Australian Competition and Consumer Commission — which have yet to be approved — would ensure Saputo sells to an approved purchaser to create or strengthen “a viable, effective, stand-alone, independent and long-term competitor” in southwest Victoria.
But the undertaking gives no guarantees on transparency on the sale price or that any potential purchaser would not be excluded from bidding.
An ACCC spokesman said the sale period for divestment of the Koroit milk powder plant was confidential.
The undertaking by Saputo not only relates to the Koroit factory but also associated land, the transfer of employees and contractors working at Koroit and the transfer of customer contracts.
The successful buyer of the Koroit plant had the option to buy the transport fleet hauling milk or request Saputo to arrange milk collection.
Saputo also gives a guarantee on supply of raw milk to the plant until June 30 next year.
The undertaking gives Saputo the right to withhold some raw milk sourced from MG suppliers for the Koroit factory to supply the dairy co-operative’s Laverton processing plant.
Saputo said it would pay all MG suppliers — including those delivering to Koroit — the same farmgate milk price as Warrnambool Cheese and Butter dairy farmers.
The undertaking follows the release of a statement of issues by the ACCC on March 1 in which the competition regulator argues there could be a substantial lessening of competition for farmers’ milk if Saputo was allowed to acquire the Koroit factory as part of its $1.31 billion deal for Murray Goulburn’s assets.
Saputo said in the undertaking that it did not consider the proposed acquisition of MG’s assets “would be likely to have the effect of substantially lessening competition in any market”.
Saputo said it would engage a financial adviser to canvass interest from “buyers locally and internationally” and appoint an independent manager to run the Koroit operation until it is sold.
ACCC commissioner Mick Keogh said it was able to scrutinise whether the sale of the Koroit operation was fair.
“The purchaser has to be approved by the ACCC,” Mr Keogh said.
“There is the ability to exercise some scrutiny over what arrangements are being made.
“If there were offers available that seemed more favourable (than others) and they weren’t being pursued by Saputo, that would raise questions.”
The ACCC is seeking public comment on Saputo’s undertaking by 5pm next Thursday.
Mr Keogh said the commission was likely to give a ruling on the undertaking by the time Murray Goulburn puts the Saputo sale deal, announced last October, to a vote of voting shareholders on April 5.
By: PETER HEMPHILL
Source: The Weekly Times