Australian Dairy Farmers (ADF) is worried about the long-term ramifications of Coles being allowed to buy two milk factories from Saputo. The Australian Competition and Consumer Commission (ACCC) on December 2 gave the green light to Coles's plan to buy two Saputo factories at Laverton North, Victoria, and Erskine Park, NSW, for $105 million. "We consider the ACCC's decision not to oppose the Coles acquisition of Saputo dairy plants will be a key turning point that the industry and ACCC will look back upon and regret," ADF president Rick Gladigau said. "We hope that in 10 years' time we are not saying 'we told you so', like we have said about the impact of $1 litre milk that Coles started in 2011. "We cannot see how this deal will result in anything but increasing Coles's already substantial market power, reducing market competition and market transparency and increasing risk to farmers." A group representing Australian co-operatives has also expressed concern at the deal. "We remain concerned the proposed acquisition is likely to significantly reduce competition in the dairy market to the detriment of both consumers and family farmers," the Business Council of Co-operatives and Mutuals chief executive officer Melina Morrison said. "As processing facilities are further concentrated in the hands of a few investor-owned dairy processors and retailers, there is less and less pressure on these businesses to share profits with farmers. "That means farmers will have less capacity to reinvest in the sustainability of their own businesses." But ACCC deputy chair Mick Keogh said it could not find "a really compelling argument" that the deal would reduce competition for milk at the farmgate nor would it change the ability of other processors to access the retail shelf. The ACCC could only consider the deal strictly under the Competition and Consumer Act. "We just have to look at it from the perspective of what the law requires us to do, and that's what we've done," he said. "And we couldn't see that we could oppose this transaction on the basis of the loss of competition." Mr Glagidau said ADF was particularly disappointed in the missed opportunity to impose additional safeguards or undertakings on Coles. "The ACCC has said that safeguards are already in place as Coles's purchases of raw milk from farmers were covered by the mandatory Dairy Code of Conduct," he said. "Yet we know processors have been lobbying the ACCC and government to have the code reviewed and watered down. "The ACCC further stated that Coles's interactions with processors are also covered by the voluntary Food and Grocery Code of Conduct. "Yet we know the ACCC themselves recommended in the Perishable Agricultural Goods Inquiry that the voluntary Food and Grocery Code should be made mandatory for retailers and wholesalers." Mr Keogh said the ACCC only imposed conditions if it was not satisfied there would be no lessening of competition and it felt measures were needed to give it that assurance. In this case, its analysis did not provide any evidence that competition would be reduced. Mr Gladigau called on the federal government to make the Food and Grocery code mandatory. "It is not lost on us that Coles has dropped the retail price for milk at the same time as the ACCC's announcement, and we wonder what this means for future pricing of milk to dairy farmers." Mr Gladigau said. Mr Keogh said the ACCC did not disagree with that call. "In fact, our submissions in relation to the food and grocery code over quite a few years have always been that we consider it's not effective because it's not mandatory," he said. "And we also have strong concerns about the dispute resolution process because of ongoing evidence that suppliers to those two major retailers, in particular, won't put their hand up and initiate a dispute where they think they've been badly treated because the fear is a retribution. "So we've criticised the dispute resolution processes, in particular, the fact that the dispute mediators are actually employed by the major retailers." But in the case of Coles buying the Saputo factories, the relationship between Coles and dairy farmers was governed by the mandatory Dairy Code of Conduct and it applied to Coles just as it did to every other dairy processor, Mr Keogh said. Want\nto read more stories like this? Sign\nup below (select Dairy\nNews) to receive our e-newsletter delivered fresh to your email inbox\ntwice a week.