On August 10, 2011, the UK Office of Fair Trading (OFT) fined four UK supermarkets and five UK dairy processors a total of GBP49.51 million for a "hub-and-spoke"/A-B-C cartel infringement. The OFT found that the companies infringed the UK Competition Act 1998 (the UK equivalent of Article 101 of the Treaty on the Functioning of the European Union) by co-ordinating increases in the prices consumers paid for certain dairy products in 2002 and/or 2003. This co-ordination was achieved by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors.
The case is interesting for several reasons:
- It is yet another example of enforcement action in the UK against an A-B-C cartel (following cases including Tobacco and Replica Kit). Once again, the case involved retail markets, the key risk area for this type of activity.
- Dairy processor, Arla, alerted the OFT and gained complete immunity from fines under the OFT's leniency programme. The fining decision therefore followed whistleblowing, which is usually the case in the UK.
- Seven other parties received reductions in their fines in return for an admission of liability. This allowed for a streamlined investigation procedure. However, embarrassingly for the OFT, it had to announce during 2010 that it had dropped some of its charges and therefore reduced fines agreed by some of these parties back in 2007/2008.
The OFT has indicated that the text of the decision should be available later this year. It will be interesting to read the full reasoning of the OFT. However, the case is yet another warning of the susceptibility of retailers and their suppliers to A-B-C infringements, given in particular that the retailers often share a limited group of suppliers and have a large number of (often very target-driven) buyers. These companies need to be very careful in particular about information flow and use of language in communications.