September 21, 2020

The CNMC fined 80 million to the main dairy companies for going against the ranchers


The National Commission of the Markets and the Competition (CNMC) has sanctioned with 80.6 million euros to eight companies of the dairy industry for committing between 2000 and 2013 a series of illicit behavior that went against the rights of farmers.

These are eight companies that operate in the raw milk supply market of cow that exchanged information in order to coordinate commercial strategies to the detriment of the interests of the farmers, which is considered a "very serious" infraction.

The sanctioned companies have been Quality Pascual, Danone, Lactalis, Nestlé, the Association of Dairy Companies of Galicia (Aelga), Central Lechera de Galicia (Celega), Peñasanta Food Corporation (Capsa), the Dairy Industries Guild of Catalonia (GIL) , Industrias Lácteas de Granada (Puleva) and Schreiber Food Spain (formerly Senoble Ibérica).

They have also participated in these behaviors Industrias Lácteas Asturianas (ILAS), Milk River, Feiraco, Celtic Milk, Forlactaria and Central Lechera Asturiana, although their infringement has prescribed.

In these exchanges of information, the Aelga and GIL associations played a relevant and relevant role, with a role of facilitators of the infraction, for which they are considered co-authors of the infringement and fined for it.

Pressure on farmers

The anticompetitive practices carried out by the offenders have consisted of exchanging information, at national and regional level, about purchase prices of raw cow's milk, purchase volumes of farmers and surplus milk.

These exchanges of strategic information had the common goal of reaching consensus and adopting a joint strategy to control the market for the supply of raw cow's milk. In addition, at certain times, they would have materialized in specific agreements to coordinate the purchase prices of milk and for the transfer of breeders among industrialists.

Thus, for example, the processing companies discussed and exchanged information on the purchase prices offered by the processing companies to their farmers, which they would offer in the future, the identity of the farmers and the volumes acquired from them, or the identity of farmers who had the intention to change the transformer and possible measures to avoid it.

This information allowed companies to adjust their behavior and avoid offering better prices and commercial conditions to farmers, limiting competition in the raw milk supply market.

As a result, farmers did not have the freedom to set the price of their product and the company they supplied, distorting the normal functioning of the market for the benefit of processors.

According to the supervisor, the agreements aggravated the situation in an already concentrated market from the perspective of demand, where there is a high negotiating power of the processing industry in front of some farmers who, in addition to being more atomized, are forced to sell production to conserve its milk quota.

Also, some of the companies They exchanged information with the intention of controlling surplus milk and the conversion of this into milk powder, artificially conditioning the supply price of raw milk.

Legal background

This is a procedure that was already instructed and resolved in 2015. The CNMC drafted a statement of facts in which certain periods of infringement were omitted for some of the companies, which led to a rectification of such data in a second pliego that Nestlé appealed.

While the judicial process was being processed, the CNMC resolved the sanction procedure on February 26, 2015. However, on July 11, 2016, the National Court partially upheld the judicial remedy filed by Nestlé and partially annulled the CNMC's decision, ordering the retroactivity of the procedure immediately prior to the correction of errors, which explains why the sanctions and the duration of the conducts are in some cases different from those imposed in 2015.

Specifically, Corporación Alimentaria Peñasanta has been fined with 21.9 million euros, Danone with 20.3 million, Grupo Lactalis with 11.7 million, Industrias Lácteas Granada with 10.3 million, Calidad Pascual with 8.6 million, Nestlé Spain with 6.9 million, Schreiber Food Spain with nearly one million, the Dairy Industries Guild of Catalonia with 90,000 euros, the Association of Dairy Companies Galicia with 60,000 euros and Central Lechera Galicia with 53,310 euros.

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