Lawsuits against Milcobel by departing members

The legal battle started almost a year ago, when the cooperative board decided to impose a ban on departures. Formally, this was in effect for three months, but in fact it was valid for a year. That ban was defeated, first in summary proceedings then on appeal. the judge ruled that the ban was much too broad and too general.

The cooperative tried to limit the damage by stating that the exemption from the exit ban only applied to a small group of farmers, but the judge refuted this. The judge also dismissed the argument that Milcobel could not financially cope with the loss of members, because why was there still a company since the first loss of members (cheese brik) taken over? And there was one new financing closed?   

Severance share paid out later
Afterwards, a group of about fifty farmers opposed Milcobel's decision not to pay out the money of the departing members (the so-called separation share) within a year, as usual, but spread it over a period of five years. The case has been brought before the court in Dendermonde and is expected to be heard after the summer.

Finally, a group of about fifty dairy farmers is also in the process of filing a lawsuit against the decision at the end of last year by the cooperative board not to pay out the cooperative deduction (reservation for the additional payment) to everyone, but only to the loyal members.

Withholding and fidelity premium
This concerns an amount of 90 cents per 100 liters, or €9.000 for a company with a milk production of 1 million liters, according to one of the affected farmers. "We have all contributed to the deduction and then suddenly only those who stay are allowed to receive anything from it?" Dairy farmers who are leaving in the coming months are not resigned to the situation.

For some farmers, the interim introduction of a loyalty premium (30 cents per 100 liters) is also a strange decision that they view with surprise. Those who have canceled their membership, but have not yet switched, have had to pay this amount every month since last summer. 

No substantive response Milobel
When asked, Milcobel says it will not respond substantively to the new procedures. According to the cooperative, this concerns 'the withdrawal modalities of a group of departures' who canceled in the period April-June 2021. In total, several hundred members said goodbye to Milcobel. Most went to LDA or Royal A-ware. A new group wants to leave in March.

The loss of milk is certainly not welcome for Milcobel, because it means that more milk has to be purchased to keep the factories well occupied. The company nevertheless benefits from the high dairy prices and works hard to keep up with the competition.

Legally speaking, things are not going well for the cooperative. Milcobel also recently received a tap on the fingers of the Financial Services and Markets Authority (FSMA). this was because it had offered 'investment instruments' (internal shares) to the members, while the validity period of an accompanying information note had expired. Each member of the cooperative must purchase additional shares annually, depending on the amount of milk supplied to Milcobel during a calendar year. New cooperators must register for one share worth €2,50 in the first year that they become shareholders of Milcobel. The accompanying information note must be correct.

Amicable settlement with FSMA
At the beginning of 2020, members had to buy more and 54 new cooperatives had to purchase their first share. At that time, the FSMA started a factual investigation and it was determined that Milcobel was infringing the legislation. It did not go to court, but Milcobel did have to pay a fine of €30.000 in an 'amicable settlement' and the name of the company was published on the FSMA website.