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EU Cracks Italian Milk Scam

Italian authorities have seized assets worth 21 million euros ($27.73 million) from companies evading European Union fines for exceeding annual milk production quotas, EU antifraud investigators said April 15.

Citing a final ruling issued by Italy’s Supreme Court , which may not be appealed, the EU’s anti-fraud unit OLAF said an important precedent had now been set for other pending cases in Italy concerning “similar schemes” to evade the EU’s milk fines.

In a statement, OLAF mentioned a network of companies in Italy, established “with the sole purpose of simulating commercial operations of sale and purchase in order to avoid the payment of the extra levy in the milk payment scheme.”

It gave no details of companies or cash amounts involved.

Last month, a report compiled by the European Commission showed that EU authorities were still fighting to claw back hundreds of millions of euros in fines amassed by Italian dairy farmers more than seven years ago for exceeding milk quotas.

Each year, the commission details national milk production and whether a country has exceeded its quota. If there has been an overshoot, then a fine – called the superlevy, an instrument dating from 1984 – is calculated via a standard formula.

Italy is usually the main “milk offender,” by far, and has often complained that its EU milk quota has been set too low.

To carry out the fraud, OLAF said, milk producers set up co-operative companies to make them appear as “first purchasers” of the milk. Usually, the companies would then have to hand over the fines payable on above-quota milk to a national authority.

But they did not do this, and neither did they carry out any real business activity, selling milk straight to dairies.

“On paper, the sale seems to involve the co-operative companies and the dairies, but, in practice, it takes place directly between the producers and the dairies,” OLAF said.

“This way, the producers are able to sell their extra-quota milk to the dairies without paying the levy,” it added.



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