Supermarket mega-chains Asda, J Sainsbury and Safeway have pleaded guilty to fixing milk and dairy prices following a probe by the Office of Fair Trading (OFT). The trio will have to pay a total of £116m in fines.
The supermarkets could now face the prospect of follow-on actions by wronged consumers or competitors.
The watchdog said that in setting the fines it had “taken into account information provided by the parties involved in the early resolution discussions which demonstrated the pressures they were under at this time to support dairy farmers.”
The admissions followed the OFT’s September findings that said major UK supermarkets fixed the price of milk and other dairy products between 2002 and 2003. The cartel cost the consumer around £270m, said the OFT.
Morrisons has since taken over Safeway.
In September, the competition regulator set out its provisional findings of price-fixing of dairy products by Asda, Morrisons, Safeway, Sainsbury and Tesco. Dairies Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman were also named (www.thelawyer.com, 20 September).
The supermarkets have instructed longstanding advisers on the probes: Asda uses Norton Rose, Sainsbury’s has turned to Linklaters, Morrisons and Arla have instructed Ashurst and Tesco is advised by Freshfields Bruckhaus Deringer. Herbert Smith has advised Wiseman while Eversheds has advised Dairy Crest.
The OFT will continue to investigate Tesco and Morrisons and dairy Lactalis McLelland, which did not admit to any price-fixing.
OFT investigation
This is a landmark case. It involves a lot of parties, complex facts, and it’s high profile – but it’s been settled with almost all the companies involved in just three months. Before the use of direct settlements in a case like this the OFT would have been embroiled in litigation lasting for years. The companies who’ve settled with the OFT will of course need to continue to cooperate but they can now put this case behind them having also reduced their fines. This is down to the constructive approach taken by the OFT and the companies involved.
OFT Investigation
Great. It is a right step in the forward looking direction as these supermarkets are playing with the tax payers’ money even with consumer items like milk which is a essential need in day to day life. Cartelisation in any form is bad but worse when it comes to day to day needs of people.