Supermarkets and dairy processors fined for co-ordinating prices

Four supermarkets and five dairy processors have been fined a total of £49.51m for co-ordinating prices.

The action follows an investigation by the Office of Fair Trading (OFT).

It 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.

The co-ordination was made possible by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors. This is known as A-B-C information exchanges.

Three infringements were committed but not all the companies were involved in all three infringements.

Arla was the first company to alert the OFT to the fact that possible infringements had taken place. It was granted immunity from fines under the OFT’s leniency programme.

Asda, Dairy Crest, McLelland, Safeway, Sainsbury’s, The Cheese Company and Wiseman 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.

“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.”

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