News Dairy
Competition authority finds unfair practices at Lactalis
The Dutch competition authority ACM imposes an order subject to periodic penalty payments on Lactalis Leerdammer for violating the Dutch so called Unfair Commercial Practices Act. The company is not allowed to unilaterally change the milk price, the ACM states in the ruling which is a novelty for the dairy farming and dairy industry.
In response, Lactalis Leerdammer has announced plans to make the milk pricing system more transparent. Talks with representatives of the dairy farmers will also start in October. An invitation for this has been sent today. However, the company does not simply accept the ruling and will appeal.
The ACM's decision follows a complaint from the Suppliers Association Leerdammer Collective (LVLC). Lactalis Leerdammer must not only adjust the delivery conditions, for example by including a transparent and objective pricing system, but also submit the amended conditions for approval to the milk suppliers, so that negotiations can still take place.
Aligning delivery conditions
LVLC has submitted multiple complaints to the ACM about the delivery conditions, but these have been rejected. LVLC is an association of dairy farmers with more than four hundred members who supply their farm milk exclusively to Lactalis Leerdammer, reports the ACM. With the ruling, Lactalis Leerdammer is obliged to align the delivery conditions with the Agricultural UCP Act within a maximum of three months. If not, Lactalis will have to pay penalty payments up to a maximum of €1,050,000.
General manager of Lactalis, Jan Verbessem, says that the company is willing to cooperate with the implementation of the ruling, but according to him, the company needs more time than the three months given by the ACM. The company also wants a review of the interpretation the ACM gives to the law. Royal Lactalis Leerdammer is therefore appealing. According to Lactalis, this legal step is separate from the will and dedication of Royal Lactalis Leerdammer to make the milk pricing system more transparent. "We hope that the end result will lead to a new standard in the sector," Verbessem reports.
Discussion also at Vreugdenhil Dairy Foods
The Suppliers Association Holland Dairy Producers, which supplies to Vreugdenhil Dairy Foods, is also in a discussion with this customer, but here the parties seem to be more in agreement on the delivery conditions.
