Surcharges without Improved Sustainability in the Milk Sector

Sağlık Hukuku

On the 25th of January, the German Competition Authority (“Bundeskartellamt”) published a press release on its website on the surcharging milk sector.

Representatives of German milk producers involved in the agricultural policy project "Agrardialog Milch" have approached the Bundeskartellamt and proposed an agreed financing concept in favor of the raw milk producers.

Agrardialog Milch proposes to retroactively stabilize the contractually agreed "raw milk price” paid out to the dairy farmers. To this effect, the average milk production costs for agricultural businesses are to be determined throughout the agricultural sector which will then form the basis for standard surcharges on the base milk price.  The surcharges would then be constantly adapted on the basis of a binding clause in contracts between producers, dairies, and food retailers.

Given the intended implementation of the project across the entire sector and the participants involved, the model presented by Agrardialog would have resulted in an industry-wide increase in milk prices. As a consequence, consumers buying milk and dairy products in retail stores would in the future not have the possibility to switch to other retailers offering cheaper products.

In conclusion, Bundeskartellamt’s decision is: Cooperation is possible - illegal price-fixing agreements are not. Price-fixing agreements which are not aimed at a higher sustainability standard than stipulated by European or national law cannot be exempted under the new provision

You can reach the full text of the press release here.

Kind regards,

Zumbul Attorneys at Law

info@zumbul.av.tr