Australia's largest dairy processor is waiting for the Australian Competition and Consumer Commission to complete inquiries into the impact of a merger on raw milk supplies and dairy food production, according to The Australian Financial Review.

Warrnambool says a merger would reduce the number of buyers of raw milk in Victoria's south-west from three to two, limiting competition for milk and potentially leding to a fall in prices paid to farmers.

But Murray Goulburn argues that a merger with Warrnambool will have little impact on competition because it is already the price setter in Victoria and there are other buyers in the milk market, primarily New Zealand dairy giant Fonterra.