Melbourne, July 24 - Australia's competition watchdog raised concerns about Italian food group Parmalat's bid for dairy producer Dairy Farmers on Thursday, but cleared a rival bid led by Japanese-owned National Foods.
The Australian Competition and Consumer Commission said it would make a final decision on Parmalat's bid by Aug. 21 after seeking further comments.
Dairy Farmers, which sells milk under its namesake brand and makes Coon cheese and Ski yoghurt, is owned by about 2,000 Australian farmers and could be worth up to A$1 billion ($962 million).
Parmalat, bidding with Australian farmers' co-operative Murray Goulburn, and National Foods, owned by Japan's Kirin Holdings, needed approval from the regulator for their bids as they have extensive operations in Australia.
The commission raised concerns that a takeover of Dairy Farmers by Parmalat might limit competition for the supply of fresh milk in Queensland state, as Parmalat would control more than half the market in the state's southeastern region.
It sought comments on whether National Foods or New Zealand's Fonterra would be able to provide competition to an enlarged Parmalat in that market.
It also raised concern that Murray Goulburn was already the top supplier of long-life milk across the country, and a takeover of Dairy Farmers would bolster that position.
National Foods, which is bidding with Australia's Warrnambool Cheese and Butter Factory, proposed to sell two milk processing plants and licence key brands to help win approval from the commission.
The commission accepted the plan and said it would not block the bid.
"The ACCC is satisfied that the proposed acquisition, subject to the court enforceable undertaking, would be unlikely to substantially lessen competition in the relevant markets," commission chairman Graeme Samuel said in a statement.
A third potential bidder, Canadian dairy products company Saputo, does not need the commission's approval as it does not have major operations in Australia.