Supermarkets Fined For Dairy Price-Fixing

Thu, 11 Aug 2011
 
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Supermarkets and dairy firms have been hit with fines totalling £50 million after being found guilty of price fixing on milk and cheese products.

Tesco, Sainsbury's, Asda, Safeway, which is now part of Morrisons, and five dairy processors were investigated by the Office of Fair Trading (OFT) following a tip-off by whistle blowers at the Arla dairy company.

The OFT found that three infringements of the Competition Act 1998 were committed between 2002 and 2003, where supermarkets and suppliers colluded to increase prices on cheese and fresh liquid cheese .

The collusion put up the price of milk by 2p a litre, or 1.2p a pint, and increased the cost of a 500g block of cheese by 10p over the two-year period.

Supermarkets shared retail price information with one another through intermediaries who worked for their dairy processing companies.

Penalty payments totalling £49.51 million have now been imposed on the guilty parties, which also includes dairy firms McLelland, Dairy Crest, The Cheese Company and Wiseman, although all companies barring Tesco have been given reduced fines for co-operating with the OFT and accepting liability.

John Fingleton, chief executive of the OFT, said: "This decision sends a strong signal to supermarkets, suppliers and other businesses that the Office of Fair Trading will take action and impose significant fines where it uncovers anti-competitive behaviour aimed at increasing the prices paid by consumers."

"Competition in the supermarket sector is generally intense and has delivered significant benefits to shoppers. Our investigation and this final decision will help ensure that this competition is maintained."

Tesco, which was hit with a £10.43m – the second largest after Sainsburys (£11.04m), continued to deny any wrong-doing and said it would defend its position "vigorously" and "through the courts if necessary".

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