The two producers will combine their marketing efforts from January 2006 as a way of reaching out to more German retailers and consumers.
Rob van Dongen, Friesland spokesperson, said the move was possible because Lactalis' French cheeses, including Société Roquefort and P'tit Basque, did not compete directly with Friesland's Dutch cheeses, under the Frico brand.
He said Friesland already had quite a sophisticated team on the road in Germany, but that the deal would benefit both firms because "local managers are more free to make decisions in their shops than in some other markets, such as the UK".
Both companies want to use the deal to improve their targetting of certain promotions and presentations at specific customers. Friesland said it already had a leading position in cheese with the top German supermarkets.
Each firm will still collect separate revenues for its own products, and both denied any plans for a more formal business merger.
Lactalis spokesperson Luc Morelon said the deal also offered cost-saving advantages.
"We have to deal with more and more expensive commercial costs and it is more simple to share these with another company that has a similar position."
European dairy producers have come under intense pressure to cut costs in the last couple of years amid rising energy and packaging bills, together with the beginning of the European Union's subsidy cuts for commodity products.
A recent report by AC Nielsen said competition between retailers had squeezed prices for international branded foods, putting more pressure on producers from the other end.
The report named Germany as the cheapest place to buy such products out of the 15 countries it surveyed. Hard discounters such as Germany's own Aldi and Lidl have also forced down prices.
Germany's poor economic situation, with around one in 10 people unemployed, has lowered consumer confidence too; something several food firms have had problems with in Western Europe generally this year.