Australian regulator flags concerns over Saputo's Tasmanian cheese business buyout

(Reuters) - Australia's competition watchdog on Thursday raised concerns about Canadian dairy firm Saputo Inc's <SAP.TO> acquisition of the Australian specialty cheese business of Japan's Kirin Holdings <2503.T>.

The deal would lead to a combination of the processing plants of the second and third biggest buyers of raw milk in the state of Tasmania, which currently compete separately with the biggest buyer, Fonterra.

"We are concerned that combining these two operators may lead to Tasmanian dairy farmers being paid lower prices for their raw milk," Australia Competition & Consumer Commission (ACCC) Deputy Chair Mick Keogh said in a statement.

Saputo announced in April that it planned to buy the specialty cheese business of Lion Dairy & Drinks, a unit of Kirin Holdings, for A$280 million ($189 million)..

The ACCC also intervened in Saputo's $1 billion acquisition last year of Australia's largest dairy processor Murray Goulburn, approving the deal only after the Canadian company agreed to divest a key asset.

(Reporting by Syed Saif Hussain Naqvi in Bengaluru; editing by Richard Pullin)