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OFT Fines UK Supermarkets and Dairy Processors £50 Million

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OFT Fines UK Supermarkets and Dairy Processors £50 Million

OFT Fines UK Supermarkets and Dairy Processors £50 Million
August 11
15:02 2011

The UK Office of Fair Trading is imposing fines totalling £49.51 million on four supermarkets and five dairy processors, following its dairy products retail pricing investigation. The OFT found that Arla Foods UK, Asda, Dairy Crest, McLelland, Safeway, Sainsbury, Tesco, The Cheese Company and Robert Wiseman Dairies infringed the Competition Act 1998 by co-ordinating increases in the prices consumers paid for certain dairy products in 2002 and/or 2003.

 

This co-ordination was achieved by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors – so called A-B-C information exchanges.

 

The OFT found that three infringements were committed. Not all companies were involved in all three infringements.

 

The first infringement related to cheese in 2002 and involved Asda, Dairy Crest, Lactalis McLelland (prior to its acquisition by Groupe Lactalis), Safeway (prior to its acquisition by Morrisons), Sainsbury, Tesco and The Cheese Company.

 

The second infringement also related to cheese but for 2003 and involved Asda, Lactalis McLelland (prior to its acquisition by Groupe Lactalis), Sainsbury’ and Tesco.

 

The third infringement concerned fresh liquid milk in 2003 and the parties involved were Arla, Asda, Dairy Crest, Safeway (prior to its acquisition by Morrisons), Sainsbury and Wiseman.

 

Arla 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 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.

 

“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,” says John Fingleton, chief executive of the OFT. “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.”

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