Breaking News on Food & Beverage Development Europe - Dairy industry hit by 50m price-fixing fine
By Ben Bouckley, 10-Aug-2011
Related topics: Financial & Industry
The Office of Fair Trading (OFT) today fined dairy processors and retailers almost £50m for retail price-fixing in the early noughties.
After a lengthy investigation, the office found that Arla, Asda, Dairy Crest, Safeway, McLelland, Sainsbury�s and Tesco infringed the Competition Act 1998.
The infringement related to co-ordinated price increases on specific dairy products between 2002 and 2003.
Easy as ABC�
This objective was achieved, the OFT said, by supermarkets indirectly exchanging retail pricing intentions via the major dairy processors, in a so-called �ABC� information exchange.
One infringement involved cheese in 2002. Asda, Dairy Crest, Lactalis McLelland before the Groupe Lactalis takeover, Safeway prior to its acquisition by Morrisons, Sainsbury�s, Tesco and The Cheese Company were all involved.
A further cheese infringement in 2003 saw Asda, Lactalis McLelland, Sainsbury�s and Tesco implicated. A liquid milk infringement also saw Arla, Asda, Dairy Crest, Safeway and Robert Wiseman Dairies involved.
However, one dairy industry source suggested to FoodManufacture.co.uk that the fines were unfair: �The irony here is that the retailers and processors were trying to pass on [the proceeds of] higher milk prices to farmers. But the OFT judged that this was a breach of competition law.�
Arla blows the whistle
John Fingleton, OFT ceo, said that the decision would send out a �strong signal to supermarkets, suppliers and other businesses�.
He added that the OFT would act and impose significant fines �where it uncovers anti-competitive behaviour aimed at increasing the price paid by consumers�.
However, Fingleton welcomed the co-operation of the firms that admitted to the infringements (all bar Tesco, which was fined £10.43m) and that lower fines had been imposed as a result.
Of the dairy processors involved, whistleblower Arla received 100% leniency for alerting the OFT to possible infringements and was not fined, despite its involvement.
Dairy Crest must pay £7.14m, Lactalis McLelland £1.66m and The Cheese Company £1.26m.
Robert Wiseman paid a £6.1m fine in December 2007 to reach settlement with the OFT, a figure reduced to £4.2m in March last year.
The sum has now been reduced to £3.2m, and a Robert Wiseman spokesman told FoodManufacture.co.uk: �We�re disappointed that we were ever involved in this. But the £1m fine reduction is welcome, and we will feed that into our numbers for 2010/11.�
