Supermarkets Fined In OFT Dairy Price Fixing Probe

Tesco, Sainsburys and Asda are among the supermarkets and dairy processors who have been fined by the Office of Fair Trading following an investigation into the price fixing of dairy products.

The OFT found that Arla, Asa, Dairy Crest, McLelland, Safeway, Sainsburys, Tesco, The Cheese Company and Wiseman infringed the Competition Act 1998 by co-ordinating increases in the prices consumers paid for certain dairy products in 2002 and/or 2003.

The OFT said that this co-ordination was achieved by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors - so-called A-B-C information exchanges.

Arla received immunity from the fines as it was the first company to alert the OFT on the matter, as well as the first to apply for leniency. All the other companies, with the exception of Tesco, received reductions in their fines because they admitted liability and agreed to early resolution.

Tesco, which was fined £10.4 million, has denied collusion and has threatened legal action.

Commenting on the investigation, John Fingleton, OFT Chief Executive, said: "This decision sends a strong signal to supermarkets, suppliers and other businesses that the OFT 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 across the UK in terms of innovation, choice and improved value for money. Our investigation and this final decision will help ensure that this competition is maintained.

"We welcome the co-operation provided by those companies which admitted to the infringements and have given them lower fines to reflect the reduced resources required to complete our investigation."

(KMcA/BMcC)