The Commerce Commission has announced its review of domestic milk markets found no valid basis for a price control inquiry under Part 4 of the Commerce Act.
It said it spoke to 32 participants in the domestic milk supply chain, including farmers, processors, wholesalers and retailers with the aim of determining if there was "little or no competition" in the market, or if control of the market was likely to increase.
"The Commission has concluded that there appears to be little or no competition in the market for the factory gate supply of raw milk, and little or no likelihood of a substantial increase in competition in this market. However, factory gate supply is already regulated under the Dairy Industry Restructuring Act and the Raw Milk Regulations and these are designed to constrain Fonterra’s market power," the Commission said.
"In both the wholesale and retail markets there is more competition than little or no competition (the threshold)," the Commission said.
“At the retail level there is competition between the two major supermarket chains, dairies, service stations and other retailers. At the wholesale level, it is the competition between Fonterra Brands and Goodman Fielder that exceeds the little or no competition threshold,” said Commerce Commission Chairman Mark Berry.
“Overall our analysis shows that the level of competition, taking into account existing regulation arrangements means that intervention under Part 4 of the Commerce Act is not possible,” he said.
Here's Labour leader Phil Goff on the decision:
(Updated with Goff video, video of Prime Minister John Key on the decision.)
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