Safeway warned over milk pricing

3 August 2000

Safeway warned over milk pricing

by Fwi staff

THE Office of Fair Trading has warned Safeway that it could face big fines if it agrees with other retailers to boost the price it pays farmers for milk.

A letter from the OFT acknowledges that farming is having an exceptionally hard time, but warns that any pricing agreements may be anti-competitive.

Whatever one might think about the desirability of helping a hard-pressed sector of the economy, the guidelines make it clear, says the letter.

We are likely to regard such agreements as significant where they involve a combined market share in excess of 25%, or where they fix prices, considerable fines could be imposed.

Safeway has said in the past it would be willing to increase retail prices and pass the increase straight back to farmers, provided other retailers did the same.

But a Safeway spokeswoman said the supermarket could be fined up to 900m 10% of the companys turnover if it fell foul of competition laws.

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