Competition watchdog finds no breaches in dairy market

The Competition Council, assessing the development of milk prices “from cow to shop shelf”, concluded that there are no illegal agreements among retailers in Latvia, but the five largest traders have 80% of the market and a large market power, Juris Gaiķis, chairman of the Competition Council, told Latvian Radio on November 10.

Over the past year, food prices have increased in all main food groups. The most significant impact on the increase in the average price level was recorded for bread and cereals, meat and products thereof, dairy products, vegetables, and eggs. Competition supervisors have started monitoring several markets this year to analyze retail conditions, including explaining the actual reasons for price resilience.

The Council started monitoring of milk price formation in spring, and this was a "very large amount of information with complex economic analysis, which has never been carried out for retail trade in Latvia", Gaiķis said.

The main conclusion is that retailers monitor competitor prices closely and adjust to them, but unless they make agreements, it is not prohibited, Gaiķis told LR.

He said the two biggest traders own more than 50% of the market and the five biggest traders 80%. They have strong market power, which was rocked by the arrival of “Lidl.”

In turn, the number of small dairy farms and processing companies is high, but they do not have market power, they cannot get volume discounts, so the industry needs to think about how to combine forces legally to fight big retailers, said Gaiķis.

He said that in this situation currently only consumers can influence traders' behavior by keeping a close eye on prices and choosing and looking for the best value for money.

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