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Supermarkets fined over dairy price fixing

August 11, 2015

business, news

Image: www.bluewaikiki.com

The Office of Fair Trading (OFT) has fined supermarket giants Tesco, Asda and Sainsbury’s each around £10 million have found them guilty of infringing the Competition Act 1998.

The allegations relate to the pricing of milk and cheese, with the accused parties found guilty of sharing pricing intentions through dairy processors, which resulted in price hikes in 2002 and 2003.

In total nine firms are facing penalties with Arla, Dairy Crest, McLelland, Safeway, The Cheese Company and Wisemans sharing the blame with the supermarket giants. The total fines reach nearly £50 million.

The scandal is thought to have cost consumers around £270 million as the companies forced a rise of 2 pence extra for a litre of milk and 2p extra on 100g of cheese.

Despite their involvement, food manufacturer Arla has avoided any kind of fine as it turned whistleblower, alerting the OFT to possible infringements. The fines were originally set to total £116 million but most companies were shown leniency after admitting to involvement.

Tesco, the UK’s biggest grocer, continues to deny any knowledge of the practice and will take the OFT to court if necessary.

This OFT investigation has lasted a over a number of years and featured a number of high profile mistakes. The regulator was forced to drop a large portion of the case involving butter price fixing, and they were also fined £100,000 for libel against Wm Morrison.

The price fixing investigation follows a long campaign by dairy farmers between 2001 and 2003 who demanded a higher the return on milk. Should Tesco win their appeal it could prove humiliating for the Office of Fair Trading following this lengthy process.

Do you think we pay too much at the supermarkets? Are Tesco right to appeal? Tell us in the comments section below.

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  • Anonymous

    It has taken OFT far too long to hold these companies to account for their actions.

  • http://www.paydayvault.co.uk Georgie

    With companies like Tesco making in excess of £1 Billion profit, fining them £10 million is hardly going to discourage this kind of activity. If the potential fine isn’t significantly more than any potential gains from this type of unscrupulous business practice they will continue.