Supermarkets fined millions for price fixing

The trio, plus Safeway and five smaller firms have in total been fined almost £50 million for infringing competition rules by price fixing on milk and cheese products.

Key Points

• Asda, Sainsbury's and Tesco fined around £10 million each

• Them and six others guilty

• Tesco disputes the decision

The OFT today announced its decision following an investigation, after a processor blew the whistle.

The supermarkets were found guilty of indirectly exchanging pricing intentions via the dairy processors, which left consumers paying more than necessary for some dairy products in 2002 and/or 2003.

The scandal is thought to have cost consumers around £270 million. The OFT initially intended to fine the guilty parties more that £116 million, but scaled back the penalties after a consultation period.

The nine firms hit are Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury's, Tesco, The Cheese Company and Wiseman.

John Fingleton, OFT chief executive, says: "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.

"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."

Tesco denial

Tesco, however, denies it colluded with the others to inflate the price of milk and cheese. The supermarket giant has threatened legal action against the competition watchdog.

The company says it reacted with "surprise and dismay" over the decision.

In a statement, Tesco promised to defend its position "vigorously" and "through the courts if necessary".