Press Release – Green Party

The Commerce Commission should consider whether regulatory changes may be needed to make our highly concentrated domestic milk market more competitive, Green Party consumer affairs spokesperson Sue Kedgley said today. The Commerce Commission is … Commerce Commission needs to find answers to milky questions

The Commerce Commission should consider whether regulatory changes may be needed to make our highly concentrated domestic milk market more competitive, Green Party consumer affairs spokesperson Sue Kedgley said today.

The Commerce Commission is currently investigating whether there are grounds to hold a full price control inquiry into the sale of retail milk.

“We have a highly unusual situation in the domestic milk market, where Fonterra collects 90% of the milk from farmers, and its only competitor in the wholesale milk market, Goodman Fielder, is required to purchase all its milk from Fonterra.

“This situation gives Fonterra a virtual monopoly in the domestic market, and the Commerce Commission should investigate whether there needs to be regulatory changes to bring about more competition.

“There also needs to be more scrutiny of how retail prices are set in New Zealand,” said Ms Kedgley.

“Given claims by farmers that they receive less than 30% of the price of milk, it would pay for the Commerce Commission to investigate what makes up the remaining 70% of the retail price.

“The retail sector for the sale of milk is dominated by two supermarket chains.

“Consumers need to be confident that the prices they are paying are fair.”

Ms Kedgley noted that when Dairy Industry Restructuring Act was passed in 2001, the Commerce Commission was concerned that amalgamating two of New Zealand’s largest dairy companies into Fonterra could be detrimental to competition.

“It appears that the Commerce Commission’s concerns at the time have been justified and that there may need to be a review of the Act, to ensure there is greater competition in the domestic market,” said Ms Kedgley.

ENDS

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