Dairies seek referral of Milk Marque
Britains dairy companies are on the warpath over Milk Marques £50m investment in a new butter and milk powder plant. They have asked the Office of Fair Trading to refer the development to the Monopolies and Mergers Commission (MMC).
The Dairy Industry Federation (DIF) believes the planned factory in Devon, intended to handle 2m litres of milk in a day, will be used to boost prices at Milk Marques bi-annual auctions.
Jim Begg, DIF director-general, said that the attempt to integrate Milk Marque vertically into processing was monopolistic.
He said: “Milk Marque wants to acquire the capability to take milk off the market so that it can squeeze supply in this quota controlled market and charge higher prices on the remainder.”
The MMC is already investigating Milk Marques auction but will not report until January. But the dairy companies have a stronger compunction in seeking remedies as the recent fall in sterling is putting upward pressure on milk prices.
Companies have benefited from the dramatic fall in raw milk prices over the past year. The strong pound has hurt dairy farmers because the price at which Brussels intervenes is determined according to a basket of European Union currencies.
The City is expecting profits growth from the processors. But if sterling continues to slide, raw milk prices could rise sharply, eating into the dairy companies improved profitability.
Dairy companies slam Milk Marque processing plan – FWi, 24 September 1998
Milk Marque wants to build £50m processing plant – FWi, 23 September 1998