Ministers request report on dairy competition

Primary Industries Minister Nathan Guy and Commerce and Consumer Affairs Minister Paul Goldsmith announced today they will request a report on the state of competition in New Zealand’s dairy industry from the Commerce Commission.

The report is required under the Dairy Industry Restructuring Act, which allowed for the merger of our largest dairy co-operatives to form Fonterra Co-operative Group Limited.

The DIRA contains provisions to ensure contestability in New Zealand’s farm gate and factory gate markets. These provisions are intended to expire when there is workable competition in the domestic dairy market.

“The dairy industry is a major part of our economy, and we’ve seen significant growth in recent years,” says Mr Guy.

“This report into the state of competition is key to assessing whether the Act is effectively promoting efficient operation of dairy markets in New Zealand.”

“The Commerce Commission is New Zealand’s independent competition and economic regulation authority. It has built up a good deal of industry expertise through its milk price monitoring functions and is therefore well placed to undertake the state of competition report,” says Mr Goldsmith.

The Commerce Commission will start work on the report after 1 June 2015, when the current dairy season has finished. This process is expected to take nine months.

“It’s important that those affected can have their say, so the Commerce Commission will be engaging with industry and other interested stakeholders throughout this process,” says Mr Goldsmith.

Information about the process, including the terms of reference for the report, key dates, and how submissions can be made, will be made available on the Commerce Commission and MPI websites after 1 June 2015.