Hirtshals, a small Danish dairy co-op, issued a complaint to the Competition Authority (CA) after it lost a major contract with a supermarket chain who was purchasing milk from the co-operative. The group claimed that Arla was guilty of restrictive trade practices in the Danish market for dairy products.
John Bak, Hirtshals co-operative's chairman, told a local reporter that Arla was offering artificially low prices to the Danish mutiple, Dansk Supermarket.
Arla is by far the biggest player in the Danish milk sector with a 93 per cent share of the market, and Hirtshals co-operatives' contract with the supermarket chain brought in 40 per cent of the company's sales revenue. The termination of the contract may have a major affect on the small time dairy group's stability in the future.
Arla Foods said in a statement that it is willing to co-operate with the CA's investigation into the mater, but is adamant that it has not taken advantage of its position.
This is not the first time that the group has been accused of abusing its position in Denmark's milk sector. Earlier in the year, the Danish business minister accused Arla of similarly abusing its position. He asked the company to dismantle its monopoly on the sector when it was discovered that Arla was issuing fines to farmers who breached their milk supply contract earlier in the year.
The company's head of group communications, Astrid Gade Nielsen, said, "for many years, Arla Foods has trained its staff in competition issues. I find it hard to imagine that we should have any problems with the regulations."