Major UK retailers fined £50m for dairy price-fixing
Tesco refused to co-operate with the Office of Fair Trading's investigation into dairy price-fixing and subsequently received a fine of nearly £12m
Print12 September 2011
Major UK supermarkets were fined millions last month for their involvement in the price-fixing of dairy products almost 10 years ago.
The Office of Fair Trading (OFT) – the UK’s equivalent of the Competition Authority – imposed fines totalling £49.51 million (€55.86 million) on four supermarkets and five dairy processors.
The OFT found that Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury’s, 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.
According to the OFT, 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 benefitted from complete immunity from fines as it alerted the OFT to the existence of possible infringements and was granted immunity under its leniency programme.
The other companies – apart from Tesco – received reductions in their fines because they admitted liability for the infringements and agreed to a streamlined procedure, thus reducing the costs of the investigation.
Tesco was the only retailer that refused to co-operate with the investigation and was subsequently fined nearly £12m. By contrast, Dairy Crest was ordered to pay £7.14m, Lactalis McLelland £1.66m and the Cheese Company £1.26m. Robert Wiseman’s fine was reduced from £6.1m in December 2007 to £3.2m.
However Tesco said the OFT’s ruling was “entirely without substance” and that “the long delay in resolving these cases, together with their evidential flaws, illustrate some important weaknesses in the current UK competition regime.”
Lucy Neville-Rolfe, Tesco’s director of corporate and legal affairs, added: “We surely have now reached the stage where the absurdity of the OFT operating as investigator, prosecutor and judge cannot be allowed to continue. The government’s plans for the new competition regime must address this anomaly, in the interests of the consumer and the business community”.
According to a food industry source quoted in the Irish Independent, farmers cannot celebrate the decision against the multiples either, as on this occasion “the retailers and processors were trying to pass on higher milk prices to farmers”.
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