The competition watchdog says Mengniu’s $600 million proposal to acquire Lion’s raw milk processing facilities in Australia will not substantially lessen competition in the Gippsland region, where Mengniu already has a presence due to a partial ownership of Burra Foods.
ACCC Deputy Chair Mick Keogh says while Burra and Lion D&D compete for raw milk, they are not close competitors.
“Our investigations concluded that dairy farmers are unlikely to switch between the two,” Mr Keogh said on Friday.
The ACCC also considered that a combined Mengniu-Lion D&D would continue to be constrained by giants Saputo and Fonterra in the region, as well as a number of smaller raw milk processors.
The deal still needs Foreign Investment Review Board approval.
The Chinese firm announced in November it would pay Japanese beverage giant Kirin for Lion Dairy & Drinks.
Lion said at the time it decided to approach Mengniu Dairy after agreeing in April to sell its specialty cheese component to Saputo Dairy for $280 million.
The Lion brands included in the dairy and drinks division include Dairy Farmers, Masters and Pura milk; Dare and Farmers Union iced coffee; Big M, Dairy Farmers and Pura Classic flavoured milk; Vitasoy soy milk and coconut milk; juice brands Daily Juice, The Juice Brothers and Berri; and Yoplait yogurt, under licence.
Mengniu, listed on the Hong Kong stock exchange, completed a $1.5 billion takeover of infant formula company Bellamy’s in December.