Arla merger causes dairy closure

Related tags Arla foods Proposal Arla foods uk

UK milk producer Southern Milk co-operative has announced that is
to disband as a result of increasing competition pressure from the
recently formed Arla Foods UK. The move could leave its 55 member's
future in danger.

It is a possibility that members of the co-operative will be employed by other UK dairy companies. The Dairy Farmers of Britain group is encouraging farmers to attend presentations set up by a number of dairy groups that could offer the members supply contract opportunities.

It is possible that Arla Foods, the company that Southern Milk holds responsible its future closure will employ some of the staff.

Plans for the merger between Arla Foods and Express Dairies were announced in March 2003 yet many in the industry such as the Office for Fair Trading (OFT) and the Competition Committee (CC) feared that the proposal could damage the industry because of the dominance that the company could have in the market.

Originally it was proposed that the EU should examine these factors but after complaints from the OFT nd CC, it was decided that the matter would be better handled by the CC. It was decided that while the combined milk pool could give both companies an advantage, it would be likely that a number of significant suppliers would be able to exert competition.

The merger has given Arla Foods UK a 25 per cent share of the dairy market and it has been predicted that the joint venture could give the company a combined income of over €26 million.

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