“Arzni Poultry Factory” company was fined in the amount of 20 million drams: the cow’s milk is entirely absent in composition of sweet cream butter produced by company. Its 100% vegetable oil (plant-origin).
Today, on November 14, at the session of the State Commission for the Protection of Economic Competition of RA it was decided to fine “Arzni poultry factory” company in the amount of 20 million drams. The fine was imposed for the manifestation of unfair competition act, in particular for misleading the consumer, as well as for violation of principles of good faith towards competitors.
The double expertise conducted by the SCPEC RA confirmed the act of unfair competition by “Arzni kat” (Arzni milk) company.
RA Competition Authority initiated an administrative proceeding on the basis of article titled “«Arzni Milk» is selling the product containing vegetable oil instead of butter” published in “Hetq” (Trail) media. Please notice, that the expertise of 72.5% fat-containing butter “Arzni Milk” conducted by “Standard Dialog” laboratory revealed that it contains vegetable oil, which is the violation of Technical Regulation “On milk and Dairy Products Safety”. “Butter” is a dairy product made exclusively from cow's milk. The SCPEC RA by its own initiative conducted double expertise of the butter produced by the company through “Standard Dialog” company. It was revealed that the product under the name sweet cream butter is not a butter as the mass fraction of milk fat in it is less than 0.01%, so it is completely made from vegetable oils. That is when on the butter package was written “pure milk of own production” as well as “our cause is just” which, in fact, mislead the consumer. During the hearings held at the Commission, representatives of “Arzni milk” failed submit any factual argumentation to demonstrate the contrary; in particular, the results of expertise of the same batch of goods or other facts were not presented. They asked (would like us) to apply a lenient measure - the warning.
The price for one kg of the butter made from the same cow’s milk and produced by the same farm had increased by over 1500 drams in 2 months.
Within the months of the occurrence of the violations a stick of so-called “sweet cream butter” produced by the same company was sold by 530 drams, when the average price for a packet of butter with the same fat content of Armenian production was 900-950 drams in the same period. The company's representatives explained this very significant difference in price by having their own farm and noticed that the manufacturing cost of milk is low in their production. However, after the initiation of the proceedings by SCPEC RA the price of butter produced from “the same cow’s milk and by the same farm” became 830 drams or the price of butter increased from 2600 to 4200 drams per kg.
In the composition of curd supplied to the kindergartens was vegetable oil
The Commission also continues to conduct studies in the field of public procurements to reveal possible unfair competition acts. At this stage, monitoring’s have been conducted in a total of two dozen kindergartens to reveal possible competition issues in the sphere of dairy products supply. The dairy products in the kindergartens were given for expertise, according to the results of which the vegetable oil was also found in curds supplied in the following kindergartens: “Yerevan № 28 kindergarten”, “Yerevan № 157 kindergarten”, “Yerevan № 125 kindergarten”, “Smiles” kindergarten, “Yerevan № 101 kindergarten”, “Yerevan № 122 kindergarten”. The above mentioned circumstance is the violation of Technical regulation of the Customs Union “On milk and Dairy Products Safety” as the curd should be exclusively animal origin, that is the composition of it should be 100% processed from cow's milk, without additives. Please notice that 1 kg of curd was sold by 1200 drams to the kindergartens in a case when the average price of this product in supermarkets is twice high – 2200-2300 drams per kg.
“Arzni Poultry Factory” company has previously appeared within the sight of SCPEC RA
In imposing of financial liability measure the Commission also took into account the circumstance that “Arzni Poultry Factory” company damaged public interest, sold its products over the whole territory of the country by misleading consumers. In addition, it had unfair behavior over his competitors. By using the vegetable oil in the case of butter and in the case of curd, it has been able to offer the products below cost, having received a competitive advantage over other manufacturers. The fact of repeated violation has also a decisive role in applying of liability measure. The company has again came into view of the SCPEC in 2014, this time receiving a warning for selling “sour cream products” under the name of “sour cream”. The company was requested to eliminate the violation by excluding the behavior aimed at harming the public interest and misleading consumers.