Etusivu \ Competition Issues \ Merger Control \ Other Merger Control Decisions \ Valio’s application for an amendment to the terms concerning the sales obligation of raw milk was approved

Valio’s application for an amendment to the terms concerning the sales obligation of raw milk was approved

According to the terms and conditions of the merger, dating to 2000 and 2004, Valio must sell annually a maximum total amount of 185 million litres of raw milk to its competitors in the domestic market. The competitors can buy the product not only as raw milk, but also as a milk component, or skimmed milk or cream.

On 9 October 2017, Valio filed an application with the FCCA, proposing an amendment to the terms that would set maximum limits to component purchases of skimmed milk and raw cream. The Finnish Competition Act gives the FCCA the authority to, “upon application, lift a condition attached to the implementation of a merger or mitigate it, due to a significant change in market conditions or another substantial cause”. As a rule, an amendment to the terms and conditions is an exceptional measure.

According to the analyses by the FCCA, the market conditions had, with regard to the component purchases, changed permanently compared to the situation prevailing at the time the terms and conditions were set. The world market prices of milk components have fluctuated greatly since 2007. From the milk quota, the competitors purchased those components that had the best profit expectation at the time, leaving Valio the responsibility for refining the less profitable component. The milk reception and joint processing capacity of the competitors had also increased, which had reduced the need to purchase milk components that had been already separated.

According to the FCCA’s assessment, the amendments proposed by Valio in its application for the monthly and customer-specific maximum limits for skimmed milk and cream continued to allow access to the market, sufficiently safeguarded competition and did not cause undue hardship to the milk quota customers. The FCCA approved the amendment in December 2017. The approved application did not affect the application filed by Valio on 1 October 2015 with the FCCA concerning the lifting of the entire sales obligation of quota milk. This application is still pending at the FCCA.