Price fixing allegations hit Wiseman shares

By Chris Mercer

- Last updated on GMT

Related tags: Oft, Competition, Milk

Shares in dairy firm Robert Wiseman have struggled to recover in
recent days after Britain's competition watchdog accused the group
of fixing milk prices in Scotland.

Wiseman's share price fell by more than 50p to 380p after the UK's Office of Fair Trading (OFT) accused it and five other dairy groups of making deals to increase prices and carve up markets in Scotland.

The allegations are a blow to Wiseman, which had enjoyed somewhat of a revival in recent months thanks to rising sales of added value products, such as extended shelf-life milk, Pure.

Any firm found guilty of breaching competition law in the European Union can be fined up to 10 per cent of its annual sales.

The OFT, which has been investigating dairies in Scotland for around six years, said the allegations focused on milk sold to middle ground customers such as schools, shops and caterers - not supermarkets.

Wiseman rejected any suggestion it had acted illegally and said it had not been consulted by the OFT during its investigation. "Wiseman will strongly contest these allegations,"​ it said.

All six firms involved, which include Scottish Milk Dairies, Graham's, Renfrew, Ballantyne and Quothquan, will now have a chance to submit their responses to the OFT's provisional findings.

Wiseman's shares were back up to 392.5p Tuesday lunchtime.

Tension has risen between the OFT and the UK dairy sector over the last year.

In Scotland, Wiseman pulled out of moves to buy both Scottish Milk Dairies and Graham's after the OFT said it would refer the proposed deals to the Competition Commission for investigation.

And, an OFT decision in 2002 to clear Wiseman of abusing its dominant market position in Scotland was criticised last autumn by the Competition Appeals Tribunal. It said there were "serious doubts"​ about crucial aspects of the OFT's investigation.

Across the UK, the OFT has spent the last 18 months probing dairy firms over so-called 'retail price initiatives' on liquid milk, suspected to have been agreed between supermarkets and dairy processors.

It is thought deals have been done over the last few years to raise retail milk prices in order to pass more money down the supply chain.

Many UK dairy officials have reacted angrily to what they believe is unfair scrutiny of their sector by the OFT. "We believe that the competition authorities should not try to thwart reasonable consolidation within the industry and it is time that their focus on the dairy sector is reviewed,"​ said Rt. Hon. David Curry MP, chairman of industry association Dairy UK.

He accepted, however, there was no room for price initiatives. "The incessant and rigorous scrutiny by the competition authorities means that co-ordinated price increases are not an option. They are illegal."

Related topics: Manufacturers, Pricing Pressures

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