‘Milk crisis’ fuels dairy industry EC antitrust investigations

By Mark Astley

- Last updated on GMT

‘Milk crisis’ fuels dairy industry EC antitrust investigations

Related tags: Raw milk, European union

The dairy sector looks set to remain a “high priority” for competition authorities across Europe as the industry continues to grapple with the current ‘milk crisis’.

According to a European Commission (EC) report, national competition authorities (NCAs) across the 27 European Union (EU) member states have been paying particular attention to the sale of raw milk after several years of raw milk price increases and instability since 2007.

This has led to a total of 21 antitrust NCA investigations in the dairy sector between 2004 and 2011, including cases of buyer cartels and price-fixing.

The EC document, Report on competition law enforcement and market monitoring activities by European competition authorities in the food sector,​ provides an overview of enforcement, advocacy and monitoring actions undertaken by national competition authorities (NCAs) and the European Commission (EC) between 2004 and 2011.

Commodity price volatility

Since 2007, the volatility of food commodity prices - such as for milk – has increased.

“The milk sector has recently suffered from high volatility of prices on international markets. After prices had increased until they peaked in 2008, they fell even more, while input costs (in particular feed and energy) continued to increase,”​ said the report.

This situation has since become known at the ‘milk crisis’.

“Competition authorities have paid particular attention to raw milk procurement markets, thus at the level of milk processing.”

“Several of the investigations in the sector concerned buyer cartels for purchases of raw milk. The behaviour of cooperatives vis-à-vis their members and their customers have also been investigated.”

The EC has investigated several instances of collusion between raw milk buyers during this period, including one occasion where the Greek NCA uncovered an exchange of price lists and the coordination of discount policies relating to raw milk between members of a buyer cartel.

Elsewhere, cartels were uncovered in Bulgaria and Lithuania after it emerged that information on raw milk purchase quantities had been exchanged and agreements on purchasing prices had been made for the commodity.

All of the firms involved were fined, the EC document added.

Competition law

Elsewhere within the dairy sector, the relationship between farmers and cooperatives has also been questioned under competition law.

Further down the dairy chain, NCAs across the EU, discovered cases where firms had executed strategies to exclude competitors from the retail sector.

Dairy cooperative Arla Foods was fined by the Danish NCA in 2006 after it emerged the firm had paid a marketing contribution to a wholesale distributer in an attempt to put an end a newly-begun agreement with one of its competitors.

“They have investigated and imposed sanctions in respect of a large number of competition infringements in numerous markets and at all levels of the food supply chain and have ensured that mergers and acquisitions have not significantly impeded effective competition,” ​added the report.

Related news

Follow us

Products

View more

Webinars