NEW ZEALAND – A Price Control Inquiry Into Retail Milk? – March 30, 2011

NEW ZEALAND – The Commerce Commission is looking at whether it needs to set retail milk prices after receiving a number of complaints about increases.

The anti-trust regulator is undertaking a preliminary analysis into whether further investigation is warranted over the price of milk for end consumers. The commission will look at raw milk supply, manufacturing and wholesale supply, and the retailing of milk products, and whether there is no enough competition between two major town milk processors and two major supermarket chains.

“The commission intends to review the operation of each of these levels and consider whether it should hold a price control inquiry,” chairman Mark Berry said in a statement. “Price control inquiries are rare and are normally confined to highly concentrated markets with very high barriers to entry.”

The pre-probe comes after a Consumer New Zealand survey found 79 per cent of respondents supported an inquiry, and underpinned renewed calls for an investigation. Last week, Agriculture Minister David Carter said it wouldn’t be appropriate to intervene in milk prices, but didn’t rule out an inquiry.

Commission chair Berry last week told Parliament’s Commerce Committee there wasn’t a reasonable circumstance to push for an inquiry, though he was open to receive arguments in favour of one.

Surging dairy prices have helped underpin New Zealand’s economy over the past 18 months, and farmers are poised to receive as much as a record $8 pay-out from Fonterra Cooperative Group.

Fonterra recently froze the wholesale price of milk for domestic consumption, which makes up about 5 per cent of its production, until the end of the year.

The regulator’s move comes as Australian supermarket chains Coles and Woolworths appeared before a parliamentary committee to explain their price war across the Tasman that saw the price of milk slashed to A$1 a litre for a generic brand.

Information TheCattleSite News Desk

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