OFT imposes £50m in fines over price fixing

The Office of Fair Trading has imposed fines close to £50m on four supermarkets and five dairy processers.

The OFT has found that Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury’s, Tesco, The Cheese Company and Wiseman infringed competition law by coordinating increases in the prices consumers paid for certain dairy products in 2002 and/or 2003.

The OFT said the coordination involved supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors – a process known as A-B-C information exchanges.

In a statement the OFT said that three infringements were committed but not all companies were involved in all three infringements.

The OFT has concluded the infringements were:

* Cheese in 2002 – involving Asda, Dairy Crest, Lactalis McLelland (prior to its acquisition by Groupe Lactalis), Safeway (prior to its acquisition by Morrisons), Sainsbury’s, Tesco and The Cheese Company

* Cheese in 2003 – involving Asda, Lactalis McLelland (prior to its acquisition by Groupe Lactalis), Sainsbury’s and Tesco

* Fresh Liquid Milk in 2003 – involving Arla, Asda, Dairy Crest, Safeway (prior to its acquisition by Morrisons), Sainsbury’s and Wiseman.

The OFT said Arla had benefitted from complete immunity from fines as it applied for and was granted immunity under the OFT’s leniency programme.

Arla was the first company to alert the OFT to the existence of possible infringements and the first to apply for leniency.

Asda, Dairy Crest, McLelland, Safeway, Sainsbury’s, The Cheese Company and Wiseman have also received reductions in their fines because they agreed to early resolution.

Each of these parties admitted liability for the infringements and agreed to a streamlined procedure enabling parts of the case to be resolved more quickly, thus reducing the costs of 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.”