Italian dairy giant Parmalat has advised the Italian stock exchange that its wholly owned Australian subsidiary had withdrawn from a joint ticket with Murray Goulburn Co-operative to bid for Dairy Farmers Co-operative.

Reports from Europe quote the Parmalat statement as saying that ``No mutually satisfactory resolution on terms and conditions has been reached, and consequently Parmalat has withdrawn from these negotiations.''

Parmalat Australia offered no comment on the reports while Murray Goulburn, also, had yet to advise its reaction.

The joint Murray Goulburn and Parmalat bid for Dairy Farmers was still being considered by the Australian Competition and Consumer Commission (ACCC) which had sought additional industry comment on its concerns about competition issues.

In particular the ACCC noted that a combined Parmalat and Dairy Farmers would command 50 per cent of the fresh milk market in southern Queensland and 85-90pc of flavoured milk volumes.

And it would further concentrate UHT milk processing with Murray Goulburn which was already the overwhelmingly dominant supplier.

This latest Parmalat announcement could trigger further restructuring in Australian dairy processing and marketing, with Parmalat CEO Enrico Biondi indicating recently that a cashed up Parmalat would consider withdrawing from the Australian market if it failed in this bid to expand market share, leaving them stranded in third or fourth position.