Does Agricultural Agreement Ensure Monopoly? Skip to content

Does Agricultural Agreement Ensure Monopoly?

The director of the Icelandic Federation of Trade, Ólafur Stephensen, finds it unacceptable for Alþingi, the Icelandic parliament, to approve a new agricultural agreement which he claims will secure the monopoly of Iceland Dairies (Mjólkursamsalan). He claims the agreement aims to withhold a system which is long since outdated, RÚV reports.

The agreement was signed in February and is good for ten years, starting January 1 of next year. It may be reviewed twice during that period. Funding for agriculture will increase temporarily by ISK 900 million (USD 7.3 million, EUR 6.6 million) next year and the abolition of the milk quota system will be postponed.

It’s not clear whether the new agricultural agreement will be signed into law without changes in Alþingi, but Minister of Agriculture Gunnar Bragi Sveinsson presented the bill in parliament on May 17. Since then, the bill has been discussed in the Industrial Affairs Committee. The agreement has been intensely debated and the party group leader of the Social Democratic Alliance has asserted it entails the extension of an outdated subsidy system.

PM Sigurður Ingi Jóhannson, who was Minister of Agriculture when the agreement was signed, has praised the agreement.

Ólafur stated, “Alþingi can’t approve this agreement because it entails provisions which directly secure the monopoly position of Iceland Dairies, which recent events show has been grossly misused, and these provisions also secure the exceptions from anti-trust laws, which the dairy industry has enjoyed. It should be subject to similar laws and regulations as other industries in the country. There are also provisions to increase tariffs on imported dairy products, which, in light of the situation, is completely insane.”

The Icelandic Competition Authority assessed Iceland Dairies a fine of ISK 480 million (USD 3.9 million, EUR 3.5 million) on Friday for a serious violation of anti-trust law, according to RÚV. The company was found to have misused its market position by selling its competitors basic ingredients for production at abnormally high prices, while Iceland Dairies itself and its associates received the same ingredients at a much lower price, even below cost. This gave Iceland Dairies a significant competitive advantage.

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