Court case highlights cut-throat nature of dairy market

A West Midlands dairy has been found guilty of unlawfully paying an illegal immigrant £40,000 to steal information from a rival supplier.

The High Court judgement provided a stark reminder of the intensely competitive nature of the “middle ground” convenience dairy sector. It also showed the hidden pressure that farmgate milk prices are under and the challenges milk co-ops supplying that sector face.

In the case, it was found that Johal Dairies had employed Gurbir Singh to steal information on customer addresses, volumes and prices from rival JN Dairies. That was then used in price negotiations to unlawfully win JN Dairies’ customers. It also emerged that Johal had offered its shopkeeper customers free milk – for up to three months in one case – to win new business.

“Most middle ground milk companies are operating on very slim margins and we’ve always known that some dubious tactics have been employed at times,” NFU dairy board chairman Gwyn Jones said. “But whatever they do in the form of promotions or discounts, the bill always ends up being passed back to the farmer.

“It also shows how difficult it is for someone like DFoB to compete in middle ground milk markets and it’s why others, such as Arla, have pulled out.”

He said there had to be much greater transparency within the middle ground markets, although he acknowledged there was no easy way of doing it. “It is good to see some light finally being shone on to what goes on in this sector and it is certainly something we will be looking at more closely.”

It is estimated the court case could cost Johal Dairies up to £1m in costs and a further hearing is due in July where the judge will determine what sanctions are to be imposed.