The Danish Competition Authority has now approved Arla Foods’ disposal of its Grøndal and Allested Dairies to Uhrenholdt Dairy and Løgismose Dairy respectively. This means that Arla Foods has met the only remaining conditions for the mergers with Kløver Mælk and the Swedish Arla. Formal approval will be given when experts have ascertained that Allested Dairy, which currently has no production, is fully operational.

The Competition Authority has accepted that all other conditions for the mergers have been complied with. The conditions demand that buyers of dairy buildings should be allowed to use the buildings for dairy purposes and that co-operative owners are given easier access to supply milk to other dairies. In addition, Arla Foods has agreed to purchase milk from dairy farmers who are not co-operative owners of the company and to make its distribution network available to competitors. The Competition Authority has taken note that Arla Foods already handles distribution on behalf of three other dairies, including a German dairy which supplies milk to Dansk Supermarked.
Arla Foods has also promised to carry out wholesale purchase and sales of milk and cream for other Danish dairies. Indeed, this has been the case for some time.
Furthermore, Arla Foods complied with the conditions regarding supply of standard dairy products to competing dairies.
The press release from the Danish Competition Authority is as follows:

“Arla Foods has complied with requirements concerning sale of dairies
The Danish Competition Authority has approved Arla Foods’ sale of the Funen dairies, Grøndal and Allested. The disposal means that the company has met its obligations vis-a-vis the Competition Authority in full.
When MD Foods merged with Kløver Mælk in March 1999 and with Arla e.k. in April 2000, MD Foods gave a number of assurances to the Competition Authority aimed at counteracting potential restrictive trade practices following the mergers. One of these commitments was that Arla Foods – within a certain time frame – would dispose of dairy capacity totalling 220 million kg milk. The dairies in question should be in good condition and operational and the purchasers should be competitors to Arla Foods.
Grøndal Dairy, which has a capacity of 180 million kg, has been sold for DKK 3 million to F. Uhrenholdt Dairy, the second largest player in the market which will, at least initially, use Grøndal dairy for cheese production. At a later stage, other products for the Danish market may be produced here. The company is primarily engaged in exports.
Allested Dairy, which has a capacity of 40 million kg, has been sold to Løgismose for DKK 3 million. Løgismose which sells a range of, primarily, organic special products in the Danish market, will primarily use Allested for the production of smoked cheese, feta and fromage frais for the Danish market. There will also be some production of new products.
Arla Foods’ agreements with the Competition Authority also mean that the company’s competitors will have access to Arla Foods’ distribution system and that Arla Foods is committed to selling or buying milk and cream to/from other dairies.
“I’m pleased that everything has now fallen into place,” said the Competition Authority’s Director Finn Lauritzen. “Originally, there was a certain amount of scepticism about the agreements because there was no provision for sanctions in case of non-fulfilment. With the sale of the two dairies to serious purchasers, however, Arla Foods has complied with the final part of the agreement.""