The Office of Fair Trading (OFT) decision to investigate the
recent move by Robert Wiseman Dairies to purchase the fresh liquid
milk business of Scottish Milk Dairies will do nothing to encourage
the consolidation and development required to drive the dairy
The £900,000 deal was referred to the OFT, who are responsible
for regulating businesses to ensure they are fair and competitive.
Willie Lamont, Chairman of the NFU Scotland Milk Committee,
"This deal concerns a fraction of the liquid milk market
within Scotland and does not in any way threaten the competitiveness
of the Scottish market. However, the result may be that a sensible
attempt at consolidation in Scotland may not go through or that
the parties involved will have to spend significant sums of cash
defending the deal which will ultimately impact on profitability.
"The last thing dairy producers need right now is another
example of the UK competition authorities hindering the successful
operation and development of the dairy sector.
"Any over-rigorous application of competition law, particularly
in the liquid milk sector, seriously constrains the ability of
businesses to develop commercially. It is also in contrast to
other EU countries, where businesses are regarded as operating
in a European market, and so despite substantial regional and
national market shares, often as much as 90%, they are not perceived
"The possible interpretation of Scotland as a regional
market in its own right leads to acute constraints on the abilities
of businesses here to develop. While logic points towards greater
consolidation among milk suppliers, there is no confidence in
the industry that this will be possible given the current attitude
of the regulatory authorities.
"It seems perverse that they are apparently concerned
over a local issue affecting a small percentage of the Scottish
milk market when they should be concentrating on the real problems
within the supply chain - something they patently failed
to address in their recent audit of the retailer code of conduct."
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