Supermarkets face huge fines
Morrisons is one of five supermarkets accused of inflating prices for milk, butter and cheese. Photograph: David Sillitoe
Britain’s big supermarkets are facing substantial fines after being accused of fixing the prices of milk, butter and cheese with the dairy industry.The alleged price collusion is estimated to have cost consumers £270m in higher prices, the Office of Fair Trading said today.
It named Asda, Morrisons, Safeway, Sainsbury’s and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.
The supermarkets denied the accusations this morning and Tesco, Britain’s biggest supermarket chain, said it would “vigorously defend any allegations that we have not acted in the best interests of consumers”.
In a tough statement, OFT director Sean Williams said it was a “very serious” case.
“Businesses should understand that where we find evidence of this kind of anti-competitive activity we will use the powers at our disposal to punish the companies involved and to deter other businesses from taking such actions.”
Today’s accusations are the provisional findings of a three-year investigation. The companies involved will now be given a chance to respond and a final verdict is expected next year.
Provisional verdicts of OFT investigations are almost always upheld and director Sonya Branch said the competition watchdog was confident of its findings. “We have a large amount of robust evidence,” she said.
The retailers and dairy processors are accused of colluding with each other on price rises over a two-year period from 2002 to 2003, during which they shared “highly commercially sensitive information” with each other, according to the OFT.
Price-fixing is illegal under competition law and companies can be punished by fines of up to 10% of their turnover. This is likely to mean fines stretching into several hundred million pounds for the companies involved.
Last month British Airways was fined a record £270m by the OFT and the US department of justice for fixing the price of fuel surcharges for long-haul passenger flights and its cargo business.
The OFT said it had warned the supermarkets over the collusion and that they were well aware their actions were anti-competitive.
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