Milk merger given go ahead
A merger between dairy companies Arla and Milko was on given the go ahead by the Swedish Competition Authority on Wednesday. The news has been received enthusiastically by farmers, but critically by competitors.
Despite the Competition Authority placing several prerequisites on the merger to prevent Arla from obtaining too dominant a market position, the news was met critically by smaller dairies. According to the company Skåne Dairies, Arla will now have around 70-75 percent of the milk market in Sweden and can afford to price out competitors by lowering their prices. Skåne Dairies president, Björn Sederblad, told Swedish Radio News that no one actor should be this big.
“Our thinking is that no one should have more than 50 percent of the market, if the market is going to work in an effective way,” Sederblad says.
The merger means that Milko’s products will now appear as Arla on the dairy shelves and Sweden’s dominant dairy company, Arla, will become even bigger. The merger was partly approved because of the economic difficulties Milko has experienced in recent years. Preconditions for the merger to go through include the selling off of Milko’s Grådo dairy plant in Hedermora.
Arla must also sell a number of Milko brands. Arla said the integration of Milko, which is based in northern Sweden will begin on November 1st. The farmer organisation, LRF, told news agency TT that the merger was good news for the dairy industry.
"It is great for farmers who have lived with uncertainty for a long time and now can continue working. It will still be a tough time for Milko's farmers, but this is a step in the right direction," said LRF chairperson Helena Jonsson in a press statement.
Dairy farmer Erik Östervee from Väse in Värmland agrees and is optimistic for the future.
“We are obviously very glad. Things will now be much, much better compared to how they have been. It was good that the Competition Authority used their common sense,” he says.
Johan Sahl, a lawyer at the Swedish Competition Authority, told Swedish Radio News about the decision to allow the merger.
“This was a very difficult decision for us to make,” he says. “And we looked very closely and thoroughly into this. I believe that the solution and decision we reached is most definitely the best for the consumer and the market as a whole.”
The food retail branch organisation, Svensk dagligvaruhandel, told news agency TT that the merger wouldn't mean that consumers would have to pay higher prices for their milk and yoghurt in the future.
"There will not be any great consequences for consumers," Thomas Svaton, Svensk dagligvaruhandel's managing says. "It's about saving production."