Milk producers have blamed retailers for the high price of milk - and have told the Competition Tribunal that they formed "mutually beneficial relations" with each other to prevent milk from being "poured down the drain".
These are some of the replies the tribunal received after the commission charged eight with price-fixing.
"It is the retailers rather than the processors whose profits have benefited by the increase. In short, rising end consumer prices may be reflection of the market power of retailers, not the processors," said Parmalat group manager Barend Coetsee.
Eight dairy firms - Clover Industries, Clover SA, Parmalat, Ladismith Cheese, Woodlands, Lancewood, Nestle SA and Milkwood Dairy - together have a monopoly in the South Africa dairy market. They could face fines of up to 10 percent of their operating profit.
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'It is the retailers rather than the processors whose profits have benefited' The eight will appear before the Competition Tribunal on Thursday for a pre-hearing to determine trial dates, make documents available to be entered as evidence and determine a running order of witnesses.
Among the charges made by the commission is that there was "an industrywide understanding and agreement to remove the surplus milk from the industry".
The surplus removal of milk "gave rise to indirect price-fixing", says the Competition Commission.
The charges emanate from a 2005 investigation by the commission after small dairy farmers in the southern Cape complained about the price paid by the dairy processors for milk.
The commission charges the industry with maintaining the price of milk artificially and not passing on the benefit of surplus milk to the consumer through processed products, and that the arrangements between producers effectively constitute price-fixing.
In affidavits already before the tribunal, Parmalat admits to an exchange agreement with Clover, with the one supplying the other with milk in various regions of South Africa. "... the exchange arrangement was simply an efficient way of getting raw material to the processing facilities, thereby minimising transport costs.
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