Scandinavia reels from double dairy scandal

Related tags Arla Denmark Allegation

Danish-Swedish dairy co-operative Arla Foods is awaiting a decision
from the Danish authorities over an alleged instance of
market-rigging, while Norwegian dairy producer Tine continues to
endure the wrath of consumers over a similar accusation, Tom
Armitage reports.

After seventeen months of investigations, the Danish Public Prosecutor for Serious Economic Crime is reportedly considering bringing charges against Arla, alleging that it stifled competition in the Danish dairy market and abused its dominant market position.

In October 2003, the Danish authorities cited eight separate instances of competition rigging, although seven of those have since been dismissed.

The remaining instance alleges that Arla paid Metro Denmark, a subsidiary of German supermarket chain Metro, an undisclosed figure for terminating a supply arrangement with rival dairy firm Hirtshals Andelsmejeri.

Arla, which controls an estimated 86 per cent stake in the Danish milk market, has strenuously denied the allegations and has vowed to fight the Danish authorities if an unfavourable verdict is delivered.

"We cannot control what appears on Metro's shelves. We do not believe we have done anything wrong,"​ a spokesperson for Arla commented.

Henning Thiesen, Denmark's Public Prosecutor for Serious Economic Crime could potentially impose a two digit million kroner fine on Europe's biggest dairy co-operative, although he told​ that "Arla have not been indicted and it is not appropriate to speculate at this time"​.

Thiesen did, however, suggest that a decision to bring formal charges would be made before Easter, while Arla speculated that it would be announced at the beginning of next week.

Meanwhile, Norwegian dairy producer Tine faces an allegation that it paid ICA Norge, a Norwegian subsidiary of troubled Dutch retail giant Ahold, NOK16 million (€1.9 million) to remove rival dairy firm Synnøve Finden's products from its shelves.

When the allegation initially surfaced at the beginning of last month, Norwegian consumers boycotted Tine's products and as a result its cheese sales dropped by around 25 per cent. According to recent unconfirmed reports in the Norwegian press, its management is to meet later in the month to draft a series of cost-cutting proposals at the beleaguered company.

Arla, however, noted that it did not anticipate public reaction to be quite so severe as the incident in question was of a much smaller scale and has now been in the public domain for several months.

The dairy co-operative has since set-up a forum via its website, addressing the queries of Danish consumers in a bid to "create a dialogue with consumers"​.

"We look forward to the date when we can put this behind us,"​ Arla concluded.

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