Supermarkets Accused Of Fixing Dairy Prices

The UK’s largest supermarkets have been accused by a consumer watchdog of collusion with dairy suppliers to raise the price of dairy products, which has led to consumers paying an estimated £270 million over the odds for milk, cheese and butter .
The Office of Fair Trading (OFT), which led the investigation into price-fixing scandal, reported: “These supermarkets and dairy processors engaged in fixing the retail prices for milk, butter and cheese, in breach of the Competition Act, by sharing highly commercially sensitive information, including details of the levels of price increases, over a two year period of 2002 and 2003.”
Tesco, Asda, Sainsbury’s and Morrisons, along with suppliers including Dairy Crest and Arla are implicated, said a report by the watchdog.
“The OFT has provisionally found that this practice was harmful to consumers by restricting the competitive process, leading to higher prices. The OFT also believes that the parties understood their actions might be anti-competitive,” the watchdog said.
The OFT issued its findings to Tesco, Sainsbury’s, Asda and Morrisons, along with diary processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.
It is now awaiting their responses to the claims, and any objections.
The OFT’s executive director Sean Williams hinted that severe punishment would be handed out for any offences that are eventually proven, pledging that the watchdog will exercise its powers to punish bad behaviour and “deter other businesses from taking such actions”.
No decision can be made by the OFT on whether or not the law has been breached until it has received and reviewed responses from the parties involved. A decision on the case is expected to be made by the end of 2008, if not sooner, the OFT said.
Tesco said it would “vigorously defend” any claims it had not acted in the best interest of shoppers, while Morrisons said it was too early to comment fully, but chairman Sir Ken Morrison said he believed the group had never been involved with any of the actions mentioned by the OFT.