OREANDA-NEWS. January 14, 2010. The Tatarstan Office of the Federal Antimonopoly Service (OFAS Russia) found that concerted actions between enterprises processing raw milk - "Edelweiss М" KMP" CJSC, "Zelenodolsk Milk Integrated Works" OJSC, "Chistopolsk Milk Integrated Works" OJSC, "Alabuga Sote" OJSC and "VAMIN-Tatarstan" OJSC - led to fixing and maintaining low purchasing prices for raw milk in spring and summer seasons in 2008 and 2009 (in breach of Clause 1 Part 1 Article 11 of the Federal Law "On Protection of Competition"), reported the press-centre of FAS Russia.

The case was initiated upon a petition of the Ministry of the Agriculture and Food Products of the Tatarstan Republic.

According to the information supplied by the Ministry, since February 2009 they have observed the trend when all processers, who buy milk from agricultural companies, are reducing purchasing prices for milk. For agricultural companies the average cost of milk production is 8300 Rubles per ton, so purchasing prices for milk turn its production and distribution into a loss-making exercise.

Low purchasing prices for raw milk reduce expenses of processing enterprises and, accordingly, decrease the costs of their products. It increases production profitability, and enhances competitive ability of the products offered by processers due to possibility to cut down wholesale ex-works prices. This shows that actions of processors were equally beneficial to the market participants and did not depend on any external circumstances, equally affecting all economic entities.

Concerted actions of processing enterprises towards cutting down purchasing prices can create a situation when milk producers are unable to choose other buyers offering different purchasing prices because alternative sale markets are practically nonexistent (or are very restricted).

The Tatarstan OFAS Russia issued determinations to the raw milk processing enterprises, which control the major share of the market of purchasing milk for further processing within the boundaries of the Tatarstan Republic, to stop concerted actions.

Also on 24th December 2009, the Tatarstan OFAS Russia found that "VAMIN-Tatarstan" OJSC breached Clause 6 Part 1 Article 10 of the Federal Law "On Protection of Competition" in terms of economically, technologically or otherwise unjustified fixing different prices (tariffs) for the same products (benchmark purchasing prices for raw milk for different suppliers - producers of agricultural products).

"Measures undertaken by the Tatarstan OFAS Russia will undoubtedly improve competitive environment in a socially important milk market. Also these decisions will encourage fair (economically justified) prices for raw milk", said Teimuraz Kharitonishvili, the Head of the FAS Russia's Department for Control over Chemical Industry and the Agro-Industrial Complex.