Dairy firms deny alleged milk price manipulation

>> Milk prices continue to rise

Vietnamese consumers have had to suffer repeated milk price hikes since the beginning of this year.

Nestlé announced price increases on January 31, while Mead Johnson and Vinamilk chose February 2 for their hikes. FrieslandCampina Vietnam also increased its prices on February 25.

With these major companies increasing prices in less than a month, some analysts and experts have suggested that the businesses had reached an agreement that they would all hike prices to manipulate the market.

At the end of February, Prime Minister Nguyen Tan Dung even ordered an investigation into this allegation.

In the meantime some major dairy producers, like Vinamilk and FrieslandCampina Vietnam, have denied the alleged collusion, explaining they were forced to charge more under pressure from rising input costs.  

“Since the third quarter of last year, global milk material prices shot up by 37 to 51 percent,” said Do Thanh Tuan, a Vinamilk public relations executive.

Another reason for the extra charges is to “increase the competitiveness of our products,” Tuan explained.

Truong Van Toan, director of public relations and legislation of FrieslandCampina Vietnam, also cited rising material and labor costs for his company’s price hikes.

The company imposed price hikes on 16 of its 47 products in order to enable itself to "continue its research and development activities to better serve consumers," Toan added.

Signs of market manipulation

Economics expert Ngo Tri Long remarked that there are signs milk producers in Vietnam are manipulating the market.

“But we need to wait for the results of the probe the finance ministry is going to carry out to have any proof of their violation of the competition law,” he added.

Long said the current management policies over the milk market are still ineffective.

He reiterated the case of Nestlé, which has recently been asked to revoke its price increases because it could not justify the rises.

On January 31, Nestlé announced a price spike on 11 dairy products without asking for permission from the finance ministry as required.

The company cited “high inflation” as an excuse for the move, a reason the Price Management Agency deemed unconvincing.

The economist Long thus suggested that a ceiling price be applied to milk prices.

Another expert said authorities should inspect these businesses to find out whether they dominate the market.

If they do, their input costs should be audited so that the regulatory agencies can determine whether their price hikes are legitimate, he said.