25 Jun 2019

Dairy tech firm ordered to pay $825k over price fixing case

4:53 pm on 25 June 2019

Dairy technology company GEA Milfos has been ordered by the High Court in Auckland to pay $825,000 after admitting to a charge of price-fixing with a competitor, Dairy Automation Limited (DAL).

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The court heard that Milfos and DAL were agreed to use a shared pricing spreadsheet for customer quotes. Photo: RNZ / Dan Cook

GEA Milfos also agreed to pay the Commerce Commission $100,000 in legal costs for bringing the case to court.

The court heard that German-headquartered Milfos and Hamilton-based DAL were competitors in the supply, installation, and maintenance of milk sensors and herd-management systems.

They agreed to use a shared pricing spreadsheet for customer quotes, however.

In his judgement, Justice Edwin Wylie noted that the fact the conduct was in anticipation of a legitimate exclusive supply arrangement was not a defence.

He said Milfos and DAL were competing in a market that was important to the New Zealand dairy industry, and one which had limited providers for farmers to choose from.

"In my view, Milfos' conduct was certainly careless - even grossly careless," Justice Wylie said.

"While Milfos and [DAL] did not set out to enter into an illegal arrangement or understanding, they nevertheless engaged in conduct that gave them an improper advantage over their customers and competitors."

The partner of Milfos in this action, DAL, was later purchased by the Livestock Improvement Corporation (LIC).

LIC chief executive Wayne McNee said his managers put a stop to the practice and reported it to the Commission as soon as they became aware of it.

"Since then, we have fully co-operated with the Commission and were granted immunity from prosecution under its leniency programme," Mr McNee said.

"The Commission is not taking enforcement action against LIC, its employees or subsidiaries.

"Our co-op exists to serve the best interests of our farmer shareholders, who own the company. That's why we acted swiftly to put a stop to this conduct and report it to the Commission."

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