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Arla facing steep fines in competition probe

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16:45 CEST+02:00
Scandinavian dairy producer Arla Foods faces more than 7 billion kronor ($900 million) in fines if the company is found to have breached laws ensuring fair competition.

Arla's competitors remain cautious about commenting on the case, launched in April by Sweden's Competition Authority (Konkurrensverket), explaining that in times of cut-throat competition, it's hard to know for sure whether or not Arla broke the rules.

The Competition Authority alleges that Arla had a plan to “more or less completely shut competing companies out of the market”.

The company is suspected of forcing vendors to accept contract terms designed to keep competitors' products off store shelves.

The agency believes agreements were made with the Coop, Axfood, Netto, Bergendahlsgruppen, and Lidl grocery chains, and perhaps with Ica grocery stores as well.

If Arla is found guilty, the company would be hit with an anti-trust fine of up to 10 percent of the company's turnover.

For Arla, the maximum fine would be equivalent to around 7.5 billion kronor, according to the Lantbrukets Affärstidning (ATL).

Arla's competitors have been careful in expressing their opinion on the allegations. In a tight market, it's hard to know what's what, said Erik Gumabon, the head of the dairy company Milko, to the TT news agency.

“But we're keeping a close eye on this and will follow the findings of the Competition Authority closely,” he added.

Lena Lundvall, CEO of dairy producer Valio Sverige, said that Valio doesn't know whether or not Arla broke the rules.

“The competition is really tough in this market and it's worth pointing out that there is really strong competition on prices,” she told TT.

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