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Arla Ingman accuses Valio of squeezing rivals with Finnish milk monopoly

By Ben Bouckley , 24-Feb-2012

Arla Ingman and other producers have filed a complaint with Finland’s competition authority regarding market leader Valio, alleging the firm has abused its position to maintain a liquid milk market monopoly, a claim the latter denies.

A spokeswoman for The Finnish Competition Authority told DairyReporter.com this morning: “We can confirm that we have an ongoing investigation regarding milk pricing in Finland, but we cannot comment further at this point, as the work is not finished.”

So when would more information be forthcoming? “We haven’t been able to confirm the timetable yet, it still depends on various factors. But if there is something to add, then we will issue a statement,” the spokeswoman added.

DairyReporter.com understands that the case relates to allegations from competitors that Valio is abusing its position as Finnish market leader (with an estimated 50-60% share of milk carton sales), to sell milk below cost price on a wholesale basis.

Valio finds complaint ‘odd’

An Arla Ingman spokesman confirmed the accuracy of quotes given by MD Reijo Kiskola to the Finnish press, where he stated the firm’s belief that Valio wished to close out market rivals, and was able to maintain lower prices as packed liquid milk only accounted for around 8% of net sales (2011).

Other native Finnish producers include Maitomaa (based in Suonenjoki), Satamaito (in Pori) and Maitokolmio (Toholampi), although it is not known whether these firms are party to the complaint.

“Everything points out to their determination to maintain the monopoly position,” Kiskola told Finnish newspaper Helsingin Sanomat.

Asked whether Valio wished to respond to the market monopoly claims, a company spokeswoman said: “We won’t give any more comments on this while the case is open.

“But as you can read in the newspaper, our CEO Pekka Laaksonen states that (as per our preliminary report), we have made a profit with the ‘basic milk’ unit. And we have kept losing customers due to the price. So it seems odd.”

Prices don’t add up?

Within the preliminary report in question – published on February 7 – Valio noted that the ‘basic milk’ market in Finland was subject to stiff competition, particularly in the south of the country where the firm held a 35% market share in this segment.

Extensive milk imports from Sweden have cut Valio’s basic milk volumes by almost 25% over the past two years. Due to falling volumes and fierce competition, operating profit for Valio’s Finnish basic milks unit decreased to 11m,” Valio said.

But another Finnish dairy industry source told DairyReporter.com that all the market players in Finland, including Valio, were now selling milk at “prices that simply don’t add up”, which they said indicated that there could be something amiss.

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