The UK OFT has imposed fines of £49.51m on four supermarkets and five dairy processors for co-ordinating cheese and milk prices. The supermarkets indirectly exchanged retail price plans through the dairy processors in 2002 and 2003.
The OFT found that Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury's, Tesco, The Cheese Company and Wiseman infringed the Competition Act 1998 by co-ordinating increases in the prices consumers paid for certain dairy products in 2002 and/or 2003.
The UK Competition Act 1998 (the Act) prohibits, among other matters, agreements and practices that have the object or effect of preventing, restricting or distorting competition in the UK or a part of it and which may affect trade in the UK or a part of it (the Chapter I prohibition). Since the OFT is not required to demonstrate any effect on prices in order to establish an infringement of the Chapter I prohibition in this case, the OFT made no finding as to whether there was any such effect.
The breakdown of penalties included Arla £0; Asda £9.39m; Dairy Crest £7.14m; McLelland £1.66m; Safeway £5.69m; Sainsbury's £11.04m; Tesco £10.43m; The Cheese Company £1.26m; and Wiseman £3.20m. All companies except Tesco admitted liability and received penalty discounts while Arla was not fined due to alerting the OFT and gaining immunity under the OFT's leniency program.
Sweden's Arla received full immunity. All other companies apart from Tesco admitted liability for the infringements. They received lower fines for agreeing to an early resolution of their cases. They have already been fined £120 million for other offences identified in the course of the investigation - later reduced to £50 million.
Tesco has denied colluding with the other retailers and has announced that they will defend their "position vigorously, through the courts if necessary." It will appeal against its £10 million fine, saying the ruling is "entirely without substance" and criticising the length of the OFT's administrative process. Lucy Neville-Rolfe, Tesco's director of corporate and legal affairs says: "We are disheartened and disturbed that the OFT continues to pursue this case at the expense of both the taxpayer and UK business. We have always said we did not collude on cheese prices and we stand firm in our rebuttal of these allegations."