The head of Cospalat, named by La Repubblica as Renato Zampa, was arrested yesterday.
Four others were put under house arrest and accused of conspiracy to commit fraud, adulteration of food products and the trade in good hazardous to health, the newspaper reported.
The farmers had allegedly diluted the hazardous milk with uncontaminated milk, Corriere della Sera reported, so that it would pass laboratory tests and end up on the market.
The newspaper said that investigators seized more than 1,000 contaminated cheese wheels and also discovered that milk branded as containing Omega-3 had been watered down.
There are a total of 24 suspects in the case, La Repubblica said, 17 of which are milk farmers accused of knowingly adding contaminated milk to the market.
The Udine-based Cospalat consortium has around 100 members, the newspaper said.
The milk consortium distributes products in Veneto, Tuscany, Umbria, Campania and Puglia, Corriere della Sera said.