'We do not determine what a fair milk price is'

Supplier organization LVL, who felt heard after the first ruling, was disappointed after the second ruling. For her members and many other dairy farmers it is not clear what has improved now, because did they or other suppliers of the processor have to agree to the new system or not, and if so, how? It was not really communicated clearly. And can the new milk price system now be called fair?

The ACM is prepared to explain how it works, assesses complaints from farmers and what is important to it. Ruby Dallyn of the Competition Department and responsible for the supervision of the Wet OHP, wants to first make clear what can be expected of the ACM. "Many farmers are more dependent on their buyer than their buyer is on a single farmer. That always creates an imbalance in the relationship. The purpose of the law is to protect farmers against unfair trade practices by larger buyers. The law has not been in force for very long and we have now taken our first decisions. The law OHP unfortunately has a somewhat confusing name, but we do not determine what is unfair. We do not express an ethical judgment, but carry out a business assessment based on the law. We check whether it is applied correctly."

On what points do you assess agreements between suppliers and processors, if they are not fair?
"We test agreements against the law. We check whether it is applied correctly. The law prohibits specific commercial practices by buyers. Think of unilaterally changing the terms of delivery, paying too late and cancelling at short notice. We find transparency important in contracts, in the sense that it is clear to all parties involved what a contractual relationship is about and that a processor, for example, does not make deductions for matters that are not related to the sale of the product. That is why objective criteria must be used in an agreement. In addition, agreement with the contract terms, for example the price, or with the price system is important. How this takes place is free of form and it may be that all suppliers agree separately, it may also be via a representative of them, as long as everyone is aware of the agreement and agrees.

Is not suppliers protesting against a new contract system of the processor also an agreement?
"The point is that processors do not simply impose a price unilaterally and that suppliers are given the opportunity to agree or not. Silent agreement is also fine."

Do the rules you use only apply to private companies, or also to cooperatives? The latter are formally already in the hands of farmers. You would think that they should automatically do well.
"It is more complicated with a cooperative because the cooperative belongs to the members. But farmers can contact the ACM if they think there is a violation, then we can see whether the Agricultural OHP Act offers a solution."

The law states that a farmer may not be confronted with a unilaterally fixed price for milk, or with another product on which he or she is heavily dependent for income. What are the options then?
"Agreeing on a fixed price is one option. That is actually the easiest, but it does not always work. Another option is to make an agreement on a milk price system (the ACM has agreed to this in the case of Lactalis), the third option is to negotiate the price periodically."

Practically speaking, the choice for a milk price system seems the most attractive for everyone, because agreeing on a fixed price in a volatile market and an economy that is constantly dealing with all kinds of changes does not seem easy to achieve. Negotiating over and over again is also not something that many want. Moreover, you can say that with the new agreement between Lactalis Leerdammer and the suppliers, there is now a format that others can easily copy...
"It's not that simple, we hear from the market. It involves quite a lot to set up and maintain a milk price system that parties have to agree on. We don't see it as a format but more as a framework that a price system must comply with within the OHP law. Within that framework, there are various possibilities. It is up to the processors themselves to make agreements with their suppliers within this framework."

It does give the processor the most flexibility, you would say. A system can also take into account windfalls or setbacks. What does the ACM do if a processor goes back on agreements made about a milk price system? For example, because the company has had a bad year and then knocks on the ACM's door with the annual accounts in hand. Can it then reclaim (milk) money? 
"Details of agreements between suppliers and processors are confidential, but it depends on the agreements what is and is not possible. We can only say something about that in individual cases. If processors and suppliers want to take into account windfalls and setbacks, they can agree on that among themselves. There is also no direct link between agreements made and the annual accounts of a company. However, business performance can have an effect on the price paid."

Who monitors whether companies adhere to agreements once made and what happens if companies make a mistake. Is a farmer then also free to make a different choice without further obligations?
"The ACM operates in the administrative law process. If we establish a violation by a processor, this does not automatically mean that suppliers, for example, no longer have a notice period or do not have to pay a termination fee. That is not up to us and falls within the private law domain. We can punish or give instructions and are always open to signals from the sector if things are not going well. We also have ongoing discussions with entrepreneurs, conduct surveys and monitor developments, but we cannot keep an eye on everything ourselves."

After the approval of the new milk price system of Lactalis, farmers of the LVLC and also other suppliers were disappointed, because in their opinion the ACM did very little. Were wrong expectations created about you?
"We find that difficult to say. The law is still fairly new and still has to prove itself in part, but with our decisions we hope to send a signal to both the farmer and the business community that we are against unilaterally fixed prices, that we want to strengthen the position of the farmer in the chain and that we want to take the sharp edges off the behavior they have to deal with."

"We are not only there for the farmer, but also for the links further down the chain. Processors can again be faced with unequal agreements with their buyers, to whom they supply. It can also be difficult there."

Complainants can also face harsh reprisals, as is known. For example, from purchasing groups of retailers.
"We realise that a report can damage the relationship between supplier and customer. For such situations, the ACM also has an intelligence unit, where companies can file their complaint anonymously and in a protected manner. In that case, a complaint can be processed with less detailed information, but measures can still be taken. We really want to be open to entrepreneurs and companies that are in an unequal position."

In addition to the ACM, the OHP disputes committee itself with the Wet OHP. How should the difference between the two be seen?
"Procedures at the Disputes Committee and the ACM are separate. The ACM is active in the administrative law area, the Disputes Committee in the private law area. The Disputes Committee really tries to resolve an individual dispute between a farmer and his buyer, more like a judge. It makes a binding decision and can award damages."

Is there mutual coordination or contact? Passages from rulings of the Disputes Committee sometimes seem to be copied directly from you.
"The ACM and the Disputes Committee both conduct independent research. There is no coordination or anything like that. However, we are both concerned with the same legislation. It is possible that the same vision is sometimes reached, but we do not coordinate."