OFT Issues Accuses Supermarkets and Dairies Over Price Fixing 

21/09/07 The UK Office of Fair Trading has provisionally found that large supermarkets and dairy processors have colluded to increase the prices of dairy products, which led to an estimated cost to consumers of around £270 million.

The OFT has issued a statement of objections, setting out its provisional findings, to Asda, Morrisons, Safeway, Sainsbury and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.

The provisional finding is that these supermarkets and dairy processors engaged in fixing the retail prices for milk, butter and cheese, in breach of the Competition Act, by sharing highly commercially sensitive information, including details of the levels of price increases, over a two year period (2002 and 2003).

The OFT has provisionally found that this practice was harmful to consumers by restricting the competitive process, leading to higher prices. The OFT also believes that the parties understood their actions might be anti-competitive and in fact retailers were previously warned of this by the OFT.

Sean Williams, OFT Executive Director, said: 'This is a very serious case. We believe supermarkets have been colluding to put up the price of dairy products. Consumers have lost out to the tune of hundreds of millions of pounds. This kind of collusion on price is a very serious breach of the law. 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.'

The OFT will not be in a position to decide if the law has been breached until it has received and reviewed the parties' responses to the statement of objections and any comments from interested third parties.