Industrialists in Spain, collectively known as the 'milk cartel', have been influencing and determining milk prices for several years.
In a significant development amidst farmers' protests in several European countries, a Spanish court has confirmed that a "milk cartel" was formed by the largest actors in the dairy industry. The cartel, which controlled the market for the supply of raw cow's milk between 2000 and 2013, has led to financial difficulties for many Spanish farmers.
The National Markets and Competition Commission imposed an initial fine of 88 million euros on the cartel in 2015. This fine was later reduced to 80.6 million euros in 2019. Nestlé, one of the companies involved, was fined 6.86 million euros in February 2024 for forming a cartel with other dairy companies to avoid competition in buying milk from Spanish farmers.
The recent decision by the National Court could be appealed to the Supreme Court, but the initial fine against Nestlé and the fines imposed on other companies such as Lactalis Iberia, Calidad Pascual, Nestlé, Schreiber Foods Spain, and Central Lechera Galicia stand. These fines are a result of the cartel's agreement to fix the prices of milk bought from farmers.
Eskariam, a law firm, has gathered over 7,000 complaints from Spanish farmers as part of a joint civil action. Affected farmers now have until July to join the collective action, potentially paving the way for hundreds of millions of euros in financial compensations. Union agrarias, a Galician farmers' union, estimates that nearly 50,000 farmers could be compensated, potentially amounting to 1 billion euros in financial damages.
The court found that competitors reduced the level of uncertainty among themselves, thus reducing competition and the negotiating power of farmers. Nine dairy companies and two associations, including the Association of Dairy Companies of Galicia (Empresas Lácteas de Galicia), were found to have formed the cartel.
While the initial fines have been imposed, the current status of financial compensation claims for the affected farmers is still ongoing. The legal avenues for compensation claims are open, but there is no specific update on resolved claims or payouts yet. The farmers' protests continue, denouncing not only the financial difficulties due to the prices imposed on the markets but also the ongoing legal battle for fair compensation.
The fines imposed on Nestlé, Lactalis Iberia, Calidad Pascual, Schreiber Foods Spain, Central Lechera Galicia, and others due to their involvement in the milk cartel have been a result of their agreement to fix the prices of milk bought from farmers, thereby impacting the financial health of the business sector. The ongoing legal battle for fair compensation by the affected farmers, as represented by organizations like Union agrarias and Eskariam, could potentially lead to hundreds of millions of euros in finance reparations, impacting the finance industry significantly.
