16 August 2002

Wiseman cleared by OFT

By Shelley Wright

Scotland correspondent

ROBERT Wiseman Dairies has been cleared by the competition authorities of abusing its dominant position in the Scottish milk market.

After a 15-month investigation, the Office of Fair Trading announced last week that the case was now closed.

Wiseman chairman, Alan Wiseman, said the investigation had been very stressful, but the company had always been confident that it would be vindicated.

He was, however, disappointed that there was no mechanism to allow recovery of the £700,000 it had spent on legal and professional fees related to the inquiry.

The investigation was sparked in May 2001 when Express Dairies, through its north-east Scotland subsidiary, Claymore Dairies, complained that Wiseman was abusing its dominant position in the supply of fresh milk to the so-called middle ground market – the term used to describe all retail outlets other than supermarkets.

Allegations surrounded Wisemans pricing of the milk it sold to middle-ground retailers, especially those in the remote areas of the north of Scotland and the Highlands.

The suggestion was that it was subsidising the distribution costs from elsewhere in the business in a deliberate attempt to undercut Claymore.

A statement released last Friday said: "The OFT found that it is probable that the middle-ground market in Scotland is separate from that in England and that it was likely that Wiseman has a dominant position in the market."

Despite the hypothetical language used by the OFT, the fact is that Wiseman controls about 85% of fresh liquid milk sales in Scotland.

"But after an extensive and thorough investigation, the OFT takes the view that further investigation is unlikely to lead to a finding of abuse. In these circumstances, the OFT cannot justify proceeding with the case," the statement added.

In September 2001, the OFT accepted informal interim assurances from Wiseman relating to milk sales in the Highlands and Islands where the firm agreed to cover its cost of supply to each of the middle-ground customers it sold to.

As a result of the case now being dropped, those voluntary assurances also come to an end.

Wiseman is still under OFT scrutiny as part of an investigation into whether a cartel operates in the Scottish milk market. &#42