A solution to the current milk crisis is being hampered by a culture of fear surrounding competition regulations, retailers and processors have warned.

On Wednesday, a high profile dairy summit, convened by the NFU, was held in Westminster, to discuss the price cuts imposed by milk processors over the past two weeks, which have resulted in cuts to farmgate milk prices of up to 2ppl.

Supermarket and milk processor representatives were not invited to the summit, which was attended by farming minister Jim Paice as well as around 2,500 dairy farmers and others reliant on the industry. Industry bodies the BRC and Dairy UK were also absent from the discussions.

But the BRC claimed that if they or any supermarket had been invited, their attendance could have been perceived as evidence of collusion over retail prices.

“Clearly the notion that retailers can get around a table and discuss milk prices is naïve, given what’s happened in the past,” said a spokesman, adding, “it’s something they’d absolutely avoid doing because of the competition law implications.”

In 2011, the OFT announced that Arla, Asda, Dairy Crest, Safeway (prior to its acquisition by Morrisons), Sainsbury’s and Wiseman had all infringed competition law by co-ordinating increases in the consumer price of fresh liquid milk in 2002 and 2003. It related to initiatives by those parties to get a better price for milk for farmers.

“It is my understanding that this is exactly what farmers want us to do now,” said one processor source. Processors were “very mindful” of competition issues, he added.

Dairy UK said that competition issues were at the forefront of its members’ minds. “There is a huge commitment to compliance with competition policy,” said director general Jim Begg.

Processors always erred on the side of caution and “rightly so”, he added.

At the summit, Paice addressed farmers’ calls for the government to take action over the price cuts. “Government ministers cannot fix prices and frankly, I don’t think we should either,” he said.

The OFT said that although the dairy industry should be careful to avoid breaches of competition law, the law was not in itself a barrier to collaboration, but warned: “There may be competition law issues where competitors share certain information - for example on future prices or competitive strategies - or agree collectively to act in certain ways - for example to boycott particular industry players or adopt a common price.”

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