Arla Receives Regulatory Go-Ahead for Milko Merger

The Swedish Competition Authority has stipulated, however, that Arla must sell certain Milko brands and the Milko dairy at Grådö in Dalarna (the Dalcarlia region).

Oct 27 2011 --- The Swedish Competition Authority has approved the merger of the two dairy cooperatives, Arla and Milko. This means that conditions are now in place for maintaining milk production in a large area of Sweden. The Swedish Competition Authority has stipulated, however, that Arla must sell certain Milko brands and the Milko dairy at Grådö in Dalarna (the Dalcarlia region).

"We are very pleased that milk production can now be maintained in a large area of Sweden. Arla will comply with the Swedish Competition Authorities’ stipulations. Via the merger, Arla will have access to more milk and will be in a position to continue to develop the Swedish dairy market for the benefit of employees, dairy farmers and consumers alike," says Director of Arla’s Swedish market, Christer Åberg.

The basic principle of the merger is that Milko members will become members and owners in Arla Foods under the same conditions as existing Arla members. From the official merger date, November 1st, the Milko farmers will receive the Arla milk price, and Arla will collect milk from every farmer who has applied to join Arla.

"The announcement is extremely pleasing – and long-awaited too. I am very relieved that we Milko farmers will be paid more for our milk from as early as 1 November. This represents a crucial boost to the finances of many Milko farms. And we, the Board, are pleased to have succeeded in ensuring that all the Milko farmers have been offered the chance to continue to produce milk, even though Milko will now cease to exist as an independent association," says Milko’s chairman, Lars Reyier.

Arla accepts the conditions for the merger as stipulated by the Swedish Competition Authority. The authority has determined that Arla must sell the  Milko dairy at Grådö in Dalarna (the Dalcarlia region). Through the sale, Arla will reduce capacity at the dairy from the current 120 million kilos of fresh dairy products a year to 50 million kilos, which will also effect the employees at the dairy in Grådö. Within six months, Arla must also sell the Milko trademarks Bollnäsfil, Tiger, Bärry, Fjällfil and Fjällyoghurt to a third party.

The task of integrating Milko into Arla will now progress in stages starting on November 1st when the Milko farmers and employees become Arla members and employees respectively. Arla calculates that, in the wake of co-determination talks, they will be in a position to present the new organisation and manning by the end of November.

"The merger will save dairy farmers in the region but it is important to bear in mind that the main reason for the merger is serious financial difficulties at Milko. As we must resolve these in the new organisation, we will not be able to save all the jobs at the dairy," says Christer Åberg.

The Milko trademarks will successively be replaced by Arla trademarks, as the Swedish Competition Authority has stipulated as a condition for approval of the merger that Arla sells a number of the Milko trademarks.