The commission will also look at global supply markets for milk products and the profitability of Australian dairy farms.
Public forums are to be held nation-wide as part of the year-long inquiry.
The ACCC has laid out the key issues it will look at as part of the inquiry in a dairy inquiry issues paper released today.
The competition watchdog was directed to examine the market by the federal government after farmgate milk solids prices in southern Australia collapsed to from $6 a kilogram to $5.60/kg then down to about $4.70 in autumn when Murray Goulburn and Fonterra cut their payment intentions in response to continuing poor global prices.
Separate ACCC investigations are already looking into the cuts to the price paid to dairy farmers for milk solids, announced by Murray Goulburn and Fonterra Australia in April and May 2016 were continuing.
The ACCC wants feedback from interested parties on issues across all product and geographical markets in the Australian dairy industry.
“This inquiry will closely examine the key competition and fair trading issues affecting the dairy industry,” said ACCC chairman Rod Sims.
“As a formal inquiry, the ACCC will also have the ability to compel information from parties including processors and retailers.
“Our aim is to present a really clear picture of the issues facing the market today, and make any recommendations to ensure it remains fair and competitive.”
Key issues to be considered by the commission will include competition for milk between dairy processors; milk contracting practices; the availability of price and other market information; the effect on the dairy industry of private label dairy products in domestic supermarkets, and options for milk supplies into global markets.
It will also take a close look at key factors influencing the profitability of dairy farms.
“The ACCC will hold public forums in a number of dairy producing regions so we can speak with dairy farmers about their concerns,” said ACCC’s agricultural commissioner, Mick Keogh.
“We will release further information about these forums in the coming months.”
The ACCC must provide its final report to the Treasurer by November 1 next year.
The inquiry formally commenced last week.
The ACCC has received $11.4 million in additional funding of over four years to pay for its new Agriculture Unit to conduct investigations and engagement in rural and regional areas.