(Adds details from ACCC statement, deal background) Dec 1...

(Adds details from ACCC statement, deal background)

Dec 1 (Reuters) - Australia's competition watchdog on Friday said it will not oppose the proposed acquisition of two milk processing plants by retailer Coles Group (COL) from local dairy processor Saputo.

Coles, the country's No. 2 grocer, had in April acquired two automated milk processing facilities from Saputo Dairy Australia for A$105 million ($69.34 million) in a move to expand its milk supply.

The Australian Competition & Consumer Commission (ACCC) said the acquisition is unlikely to result in a substantial reduction in competition after taking into consideration various concerns from different stakeholders.

"We explored the industry’s concerns very closely through discussions with farmers and their representative bodies, and conducted a detailed review of Saputo and Coles’ internal documents and their incentives,” said ACCC deputy chair Mick Keogh.

The ACCC also said that other companies including Lactalis and Bega Cheese in dairy markets would continue to be competitors for raw milk in central New South Wales irrespective of the proposed deal. ($1 = 1.5142 Australian dollars)