Competitors to Tine, Norway’s biggest dairy player, have received subsidies for distributing their products to help keep them competitive.
Tine has a competitive advantage because it has many more dairies than the competition, including one outside Oslo, allowing for lower distribution costs. As such, the government has subsidised competitors in recent years in order to ward off a monopoly.
But the Norwegian Directorate of Agriculture is set to end the support, which provides dairy producers with millions of kroner to help with distribution.
The Norwegian Consumer Council warned that the price of everyday essentials like milk and cheese will, along with other dairy products, go up as a result.
“The dairy Q has said that it must immediately raise the price of its dairy products, which will probably make them more expensive than Tine’s products. Tine could also increase its prices and get a higher profit margin. We do not know. We are afraid of the competition because they (Tine’s competitors) will not have the opportunity to compete on price,” Olav Kasland from the Norwegian Consumer Council explained to public broadcaster NRK.
The Consumer Council told NRK that the product selection on offer was also likely to suffer.
Bent Myrdahl, managing director of dairy producer Q, has said that the company wouldn’t offer as many products going forward.
“When we are impacted like this, we will have less innovation, and we will be less able to fight on price,” he told NRK.
According to the public broadcaster, Tine has a market share of around 70 percent and a monopoly on several dairy products.
Tine said that removing the support would enable them to better compete on price with their rivals, according to the report.