The Commerce Commission has cleared the way for Fonterra to buy the New Zealand Dairies' milk processing plant in South Canterbury.
The Russian-owned factory went into receivership in May, owing the 27 farmer suppliers $25 million dollars for last season's milk.
The Commission says the acquisition is not likely to lessen competition, and Fonterra's cooperative structure and the regulatory environment means it cannot depress the prices it pays farmers for milk in the South Canterbury and North Otago regions.
It has also allowed a deal between receivers BDO Chartered Accountants and Fonterra to keep the plant running through the 2012/13 milking season.
The independent dairy processor Synlait had bid for the plant but BDO said the sale to Fonterra provided the best deal for the company's stakeholders and would result in farmers receiving all their money they were owed back.