Major UK dairy processors and supermarkets hit by £50m price fixing fine

By Helen Glaberson

- Last updated on GMT

Related tags: Dairy crest, Dairy processors, Asda, Tesco, Sainsbury's

Major dairy processors and supermarkets in the UK have been fined almost £50m for retail price-fixing that took place almost ten years ago, according to the Office of Fair Trading (OFT).

On announcing its decision today, the OFT said was imposing fines totalling £49.51m on four supermarkets and five dairy processors in the UK.

The OFT said Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury's, Tesco, The Cheese Company and Wiseman had infringed the Competition Act 1998 by co-ordinating increases in the prices consumers paid for certain dairy products in 2002 and/or 2003.

This co-ordination was achieved by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors - called ABC information exchanges.

Three infringements

The OFT said three infringements were committed, although not all companies were involved in each offence.

Two infringements related to cheese. The first, in 2002, involved Asda, Dairy Crest, Lactalis McLelland (prior to the Group Lactalis takeover), Safeway (before it was bought by Morrisons), Sainsbury's, Tesco and The Cheese Company.

Another took place in 2003 with Asda, Lactalis McLelland, Sainsbury's and Tesco.

A third liquid milk offence involved Arla, Asda, Dairy Crest, Safeway, Sainsbury's and Wiseman.

The OCT said Arla applied for and was granted immunity from the fines under the OFT's leniency programme.

This was because Arla was the first company to alert the OFT to the existence of possible infringements and was the first to apply for leniency, according to the UK authority.

Asda, Dairy Crest, McLelland, Safeway, Sainsbury's, The Cheese Company and Wiseman received reductions in their fines because they agreed to early resolution, said the OFT.

Response

Graeme Jack, communications director for Wiseman Dairies told DairyReporter.com the firm was disappointed that it was involved in the investigation.

However he said the reduction of the fine, by a million pounds, would benefit the company in the upcoming financial year.

It's important to stress that Robert Wiseman Dairies didn't benefit from this initiative by a single penny, with extra revenue passed straight to dairy farmers who supplied us,”​ he added.

John Fingleton, OFT chief executive, said the authority’s decision sent out a “strong signal​” to supermarkets, suppliers and other businesses that the OFT would take action and impose significant fines where it uncovered anti-competitive behaviour aimed at increasing the prices paid by consumers.

“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,”​ he added.

Related topics: Manufacturers, Pricing Pressures

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