Milk testing firm GEA Milfos to pay $925k for fixing prices

By Paul McBeth

June 25 (BusinessDesk) - Milk testing technology firm GEA Milfos International will pay $925,000 in penalties and costs after admitting that it fixed prices on milk sensors with rival Dairy Automation.

In the High Court in Auckland last Thursday, Justice Edwin Wylie ordered Milfos pay a penalty of $825,000 for fixing prices between October 2012 and September 2014, and noted the agreement for Milfos to pay $100,000 to the commission's investigation and enforcement costs.

Milfos bought milk sensors from Dairy Automation on a wholesale basis, and the two companies started discussions in 2010 for Milfos to become the exclusive retailer of the products. During those talks, the companies agreed to the price Milfos would sell the sensors and related herd management software systems - lower than what Milfos previously used but higher than Dairy Automation.

That arrangement continued even after the talks for an exclusive arrangement ended, Justice Wylie said.

"The fact that the conduct was in anticipation of a legitimate exclusive supply arrangement is not a defence," the judge said.

"In my view, Milfos’ conduct was certainly careless – even grossly careless. It matters little whether it was also reckless."

The judge agreed to the $1.1 million starting point put forward by the commission and Milfos, then discounted that by 25 percent for the company's admissions and cooperation.

Commission chair Anna Rawlings said the case was a reminder to businesses about the risks of setting prices with a distributor that competes with them in the retail market.

"Companies should seek legal advice before discussing retail prices with a distributor that competes with them to sell the same products direct to consumers, to ensure they don’t put themselves at risk of breaching the Commerce Act," Rawlings said in a statement.

Dairy Automation, now known as Smart Farm Technologies, was warned by the commission in December 2017, which the regulator said accounted for the extent of its involvement in the conduct. In February 2014, Livestock Improvement Corp bought the Dairy Automation assets and continued to sell the products at a wholesale and retail level until August 2015.

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