National Court confirms the existence of a cartel between dairy companies

The National Court has confirmed the Competitions and Markets Authority (CNMC) Resolution of July 2019 that considered that eight dairy companies and two associations formed a cartel whose illicit conduct consisted of exchanging sensitive commercial information to coordinate the purchase of milk.

In nine sentences, one for each appellant business, the judges of the Sixth Section confirm the fines of 8.5 million euro imposed on Calidad Pascual; of 53,310 euro to Central Lechera Galicia; 11.6 million to Grupo Lactalis Iberia; 6.8 million to Nestlé and 929,644 euro to Schreiber Food España.

The Court partially upholds the appeal presented by four other companies, Comercial Alimentaria Peñasanta, Danone, Industrias Lácteas Granada (Puleva), and Asociación de Empresas Lácteas de Galicia, understanding that some of the periods investigated are statute-barred, which is why it orders the CNMC to recalculate them.

In general terms, the rulings of the Sixth Section of Litigation confirm the sanctions for very serious infringements of article 1 of Law 15/2007 and article 101 of the Treaty on the Functioning of the EU in matters of competition committed by the companies investigated among the years 2000 and 2013.

The Court considers proven the existence of exchanges of information on prices and other commercial conditions between competing companies in the dairy sector, contacts on prices and other commercial conditions by these relevant companies in the dairy sector, through the two investigated associations, the most representative of the sector. It also considers accredited contacts with farmers in order to inform or agree on strategies, as well as exchanges of information on milk surpluses for their management.

The evidence analysed, according to the Chamber, shows that throughout the infringing period, the companies, through the exchange of information, reduced the level of uncertainty between them, with the consequent decrease in competition and the bargaining power of the ranchers in order to control the supply market for raw cow’s milk, which, in the opinion of the Chamber, constitutes a single and continuous infringement, regardless of the fact that not all companies have participated in all the conduct.

The Court analyses the actions attributed to each of the companies and concludes that a cartel has been established as a single and continuous infringement that would encompass practices of exchanging sensitive commercial information that could have materialized at certain times in price-fixing agreements and market distribution.

In relation to the confirmed fines, the Chamber rejects the appellants’ argument that they consider them arbitrary. For the court, they are motivated and are not disproportionate because they are below the average of the maximum sanction rate, with a percentage that adjusts to the particular circumstances of the parties involved.

In the case of three of the companies, the Chamber asks the CNMC to recalculate the fines taking into account the periods that are considered prescribed for each of them. In the case of the Association of Dairy Companies of Galicia (AELGA), the court confirms that it participated in the cartel, but annuls the fine due to lack of motivation.

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