Australia's competition watchdog to not fight potential Lactalis bid for Fonterra assets

By Sherin Sunny and Rajasik Mukherjee

(Reuters) -Australia's competition watchdog said on Thursday it would not oppose any potential bid from French dairy giant Lactalis to buy New Zealand-based Fonterra Co-Operative Group's consumer, dairy ingredients and food service businesses.

The Australian Competition and Consumer Commission's (ACCC) informal probe into the unannounced bid came after a Reuters report that firms including Japanese food manufacturer Meiji and Canada's Saputo were mulling bidding for the units Fonterra was seeking to divest.

ACCC Deputy Chair Mick Keogh said in a statement that the potential acquisition was unlikely to result in a "substantial lessening of competition."

New Zealand-based Fonterra announced in November its plan to either sell the units or list them through an initial public offering.

Fonterra said in an emailed statement on Thursday that it was continuing "to pursue a dual track divestment process and no decisions have been made."

Lactalis did not immediately respond to Reuters' requests for comment.

Both Lactalis and Fonterra are major players in Victoria and Tasmania, buying large quantities of raw milk and producing a wide range of dairy products for domestic consumption.

The competition regulator said in certain Victorian regions, alternative raw milk buyers would continue to compete with Lactalis, while in Tasmania, the French firm's limited presence would allow for fair competition with rival brands.

Lactalis, one of the largest dairy products group in the world, owns a range of brands and sells everything from yoghurt to flavoured milk and desserts.

Fonterra, New Zealand's largest dairy company, owns consumer brands such as Western Star, Mainland, and Perfect Italiano.

"Fonterra stands to benefit from streamlining business operations by focusing on its core strengths in food service and ingredients," said Tom McBride, founder of McBride Wealth, a New Zealand-based financial advisory firm.

(Reporting by Sherin Sunny & Rajasik Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Subhranshu Sahu)