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Supermarkets fined for price fixing  
Posted by Mark Warner on December 7 2007, 11:34 » Uploaded 07/12/07 12:50  

Latest news from free-market enterprise Britain...

Fiona Walsh, business editor
Guardian Unlimited,
Friday December 7 2007

Britain's supermarkets and dairy groups have been fined £116m by the Office of Fair Trading, after admitting fixing the prices of milk, butter and cheese.

Sainsbury's, Asda, Safeway, Dairy Crest, Wiseman and The Cheese Company have all admitted to anti-competitive practices and the case against them has now been resolved, the consumer watchdog said today. But it is continuing its investigation into Tesco, Morrisons and cheese maker Lactalis McLelland, which continue to deny that they were involved.

Today's fines follow a three-year investigation into the industry and relate to price-fixing over a two-year period from 2002 to 2003.

The price collusion is estimated to have cost consumers £270m in higher prices.

While the fines total a maximum of £116m, the companies will pay significantly less than that after being granted large reductions in their penalties in return for co-operating in the investigation.

Sainsbury's, which has been fined £26m, insisted this morning that the "price initiatives" had been designed to help farmers after the outbreak of foot-and-mouth disease in 2001.

'We are disappointed that we have been penalised for actions that were intended to help British farmers, but recognise the benefit of a speedy settlement with the OFT," said chief executive Justin King.

He added: "The price initiatives in 2002 and 2003, which were widely and publicly reported at the time, were designed to help British dairy farmers at a time of considerable economic pressure and public debate about whether farmers were getting a fair price for their products."

Earlier this year 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, after rival Virgin Atlantic blew the whistle on the collusion.

Asda refused to disclose its fine but the figure is thought to be similar to Sainsbury's, at around £26m. Asda said it regretted the price collusion: "Our intention was to provide more money for dairy farmers, who were under severe financial pressure at the time.

"These issues concern all the major supermarkets but we've chosen to settle this matter quickly because we believe it's the right thing to do for our customers," the group said.

The companies insisted today that they made no extra profit as a result of the price fixing. Dairy Crest, which has been fined £9.4m, said their actions were "very well publicised at the time and received widespread support including strong political backing".

Alan Wiseman, chairman of Robert Wiseman Dairies, said he was disappointed with the outcome of the investigation, and that "every penny of additional revenues paid to Wiseman was passed directly to our suppliers."

Dairy processor Arla Foods escapes without any penalties. The company signed a leniency agreement with the OFT early on in the investigation and was granted immunity.

Tesco continues to refute the OFT's allegations. Director Lucy Neville-Rolfe, said this morning: "As we have always said, we acted independently and we did not collude with anyone.

"Our position is different from our competitors and we are defending our own case vigorously."

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