UK Dairy officials to meet OFT amid rising tension

By Chris Mercer

- Last updated on GMT

Related tags: Dairy sector, Competition, Oft

British dairy representatives will meet with the Office of Fair
Trading to try and solve their differences, as one official admits
retail price initiatives are a no-go.

The Rt. Hon. David Curry MP, chairman of Dairy UK, said the industry body "is to meet the OFT to discuss the implementation of competition policy in the UK"​.

The move comes amid dairy sector officials' falling confidence in the ability of the OFT to do its job.

"We believe that the competition authorities should not try to thwart reasonable consolidation within the industry and it is time that their focus on the dairy sector is reviewed,"​ said Curry.

He and others have vehemently criticised OFT interference in the dairy sector over the last few weeks, arguing that restructuring and consolidation are essential if the UK is to compete with its European rivals.

The latest public row emerged when processors Dairy Crest and Robert Wiseman said the OFT was investigating them in relation to "retail price initiatives"​.

It is thought several deals have been done over the last few years to raise retail milk prices in order to pass more money down the supply chain.

Curry, however, has now said the dairy industry cannot win on this issue. "The incessant and rigorous scrutiny by the competition authorities means that co-ordinated price increases are not an option. They are illegal.

"We have all been reminded over the last few days how much scrutiny the dairy sector is under with the revelation of an OFT investigation."

Curry recently told 250 industry representatives that the OFT would jeopardise the dairy sector's future if it prevented the development of a more powerful supply chain.

Yet, he conceded on Wednesday that milk prices could only change via market-driven competition.

Dairy UK has also joined Britain's National Farmers' Union in opposing strike action by dairy farmers incensed at the low price they are paid for their milk. UK farmgate milk prices are the lowest out of the pre-enlargement EU-15 countries.

Both bodies warned producers not to break contract agreements and said further strikes planned for December may undermine consumer enthusiasm for dairy.

The OFT has been investigating price-raising initiatives for most of this year and warned the dairy industry in a letter in January that "price fixing agreements are among the most serious breaches of competition law"​. It said dairy farmers' difficulties were no excuse.

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