HC Deb 09 December 1999 vol 340 cc982-3
10. Mr. Owen Paterson (North Shropshire)

If he will make a statement on monopolies in the dairy industry. [100534]

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

The recent Monopolies and Mergers Commission report found that Milk Marque was using uncompetitive practices to exploit its monopoly position. I am pleased that the members of Milk Marque have agreed to establish three successor bodies.

Mr. Paterson

Processing milk on the continent is twice as efficient as in this country because companies such as MD Foods in Denmark, Parmalat and Danone are based on large farmer co-operatives with a substantial hold of their national milk market. The Government are determined to smash up Milk Marque—although it falls under the European definition of a monopoly—at vast legal expense. How will successor companies ever get up to European standards of efficiency when they will be so much smaller?

Mr. Byers

I know that the hon. Gentleman does not like facts that get in the way of his prejudice, but may I inform him that the Monopolies and Mergers Commission report said that there should be a compulsory break-up of Milk Marque? I did not agree with that. I said that the auction practices should be changed. It is the members of Milk Marque who have voluntarily agreed to break it up into three successor bodies. I have said clearly that, provided that they act in a competitive way—I have asked the Director General of Fair Trading to look at the matter during the next few months—from April, I am prepared to agree that they can get into processing.

That is my commitment; that is my decision. It reflects the fact that it was the Conservatives who, when they moved away from the Milk Marketing Board, required that Dairy Crest, the processing arm, be separated from Milk Marque. That was the Conservative Government's decision. The present Government have acted in the interests of the dairy industry.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

The Secretary of State's position will be welcomed by both customers and farmers, but the Milk Marketing Board was set up precisely because, during the 1920s, the whole industry was devastated by industrial practices that wiped out any protection for producers or customers. I hope that he will at least keep a sharp eye on developments in the successor companies to ensure that we do not damage the dairy industry even further.

Mr. Byers

My hon. Friend makes an important point. A balance can be struck between protecting the industry, allowing it to become more competitive by letting it get into processing—I welcome the opportunity of giving it that agreement—and reflecting the needs of the consumer. I happen to think that a competitive dairy industry will be able to provide consumers with a quality product at a good and affordable price. Those are my objectives. The procedures that have been agreed voluntarily by the farmers themselves will be the best way forward.

Mrs. Angela Browning (Tiverton and Honiton)

The Secretary of State will know that there is some concern among dairy farmers that the break-up of Milk Marque into three parts rather than two may make them unviable or make one particular area less viable. Will he assure the House that he will monitor, or ask the Office of Fair Trading to monitor, the position carefully? If it looks as though the decision to split into three, rather than two, will jeopardise certain regions, will he be flexible enough to allow some form of amalgamation to take place before more dairy farmers have to sell up and get out of farming?

Mr. Byers

We need to be absolutely clear. The decision to break Milk Marque up into three successor bodies was taken by the members of Milk Marque themselves, not by the Government. The Government looked at the MMC recommendation, which was for a compulsorily break-up, and said no. That was my decision, but the members of Milk Marque have now made that decision. It is arrogant in the extreme for Conservative Members to try to overrule the decisions of members of Milk Marque. It is their decision and I welcome the fact they have now agreed to go into three successor bodies.