Former Milk Marque Entities Gain Processing OK

The three successors to Britain's former dominant dairy co-op, the Milk Marque, have gained the governmental green light to proceed with processing milk.

The groups—Axis, Milk Link and Zenith—were created from the ashes of the Milk Marque last fall when the co-op agreed to divide itself into three regional groups after the government threatened it might dissolve the $1.63 billion/14,000 producer-strong organization.

Authorities alleged the group was unfairly exercising its 40% market share in the U.K. milk market.

Britain's Secretary of State for Trade and Industry, Stephen Byers, announced the move this week after the director general of fair trading stated that the trio had been operating independently during the winter months.

"To enter the milk processing market has been a long-term objective of the raw-milk producers, and I'm personally pleased that I have been able to agree to it," Byers said. "This will provide new opportunities for the dairy industry and will allow the industry to enter new markets and develop innovative products.

"Should the new businesses choose to extend their processing activities through acquisition, they will, of course, be subject to the merger provisions under competition law in the same way as any other company," he said. "In addition, Milk Link, Axis and Zenith must, like all undertakings, operate their businesses in accordance with both domestic and European competition law."

It is imperative that the three compete with one another, authorities said, so the industry realizes an improved structure for raw milk supply.

Under the dissolution pact, the Milk Marque provided the government with assurances that the operations of the surviving trio would be entirely independent, with no joint ventures established among them for marketing or processing milk. The groups also are prohibited from having common directors or common shareholdings.

Edited by Gerry Clark