UK Office of Fair Trading Drops Dairy Allegations Against Tesco

The OFT’s dairy investigation related to the alleged exchange of commercially sensitive information about the future retail price of milk, butter and cheese during 2002 and 2003.

3 May 2010 --- The OFT (Office of Fair Trading ) has decided to drop certain allegations against Tesco as part of its Dairy investigation, at the same time as agreeing a penalty discount in recognition of Tesco notifying the OFT that it does not intend to contest the remaining aspects.

Having considered detailed representations and new evidence from Tesco following the issue of the Statement of Objections in September 2007, and a supplementary Statement of Objections, the OFT has concluded that the evidence it now has on file is insufficient to support an infringement finding against Tesco with regard to three alleged dairy initiatives - relating to liquid milk in 2002 and 2003 and value butter in 2003. The OFT did not receive any representations from Tesco relating to UK produced cheese in accordance with Tesco's non-contest stance.

In addition, on being notified by Tesco that it does not intend to contest the provisional OFT findings of a breach of competition law relating to the exchange of commercially sensitive information on certain cheese lines with two of its cheese suppliers in 2002 and one of its cheese suppliers in 2003, the OFT has agreed a discretionary penalty discount of 10 per cent consistent with previous case precedent.

The OFT expects to conclude and issue its decision by early summer 2010.

Commenting on the OFT’s announcement that it is dropping its milk and butter allegations against Tesco as part of its dairy investigation Lucy Neville-Rolfe, Executive Director (Corporate and Legal Affairs) said:
“We are pleased that the OFT’s dairy investigation has finally come to an end and that the OFT has dropped its major charges against us.

We have always said that we were never involved in price fixing activities and the announcement reflects this.

We are delighted to have been cleared of all wrong-doing in relation to milk and butter.  We disagree with the OFT’s views on cheese. We firmly maintain that we are innocent of all allegations against us and at no point sought to collude with other retailers or dairy processors on prices.  But given the passage of time and the cost of litigation, we are keen to bring this lengthy and costly process to a close.

We have always competed hard to provide the best possible deal for customers and will continue to do so.”

The OFT’s dairy investigation related to the alleged exchange of commercially sensitive information about the future retail price of milk, butter and cheese during 2002 and 2003. “This was a difficult time for the dairy industry when, in an effort to support farmers and responding to feedback from customers and others, we, acting independently, increased the retail price of a number of dairy products,” Tesco stated.