The Competition Commission has announced that it has enough evidence implicating supermarkets in milk price domination. The Milk Producers Organisation (MPO) asked the Commission, which is already investigating dairy processing companies, to include retailers in its investigation.
MPO managing director Etienne Terre’Blanche said retailers are making up to 47% profit on 1ℓ of milk. “Supermarkets carry very little risk,” said Terre’Blanche. “Milk buyers have to pay for shelf space, merchandising and promotions and are only paid 60 to 90 days after delivery.” This places a lot of pressure on milk buyers and pressurises farmers to the point that it’s no longer viable to produce milk. “Farmers only get about R3/ℓ,” said MPO economist Dr Koos Coetzee. “This is too little and could cause milk shortages.”
The MPO is set to meet with supermarkets, soon, to discuss the issue. This news comes as eight of the major dairy processing companies face fines of up to R500 million if found guilty of price fixing by the Competition Tribunal. The Competition Commission announced on 29 January that it had gathered enough evidence of anti-competitive behaviour against Clover Industries, Clover SA, Parmalat, Ladismith Cheese, Woodlands Dairy, Lancewood, Nestlé SA and Milkwood Dairy.
Mirroring events in the bread price fixing scandal, Clover has received corporate leniency in exchange for information on the activities of the other members of the cartel. – David Steynberg
