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Tesco fined £6.5m for part in dairy price-fixing

Tesco has always denied colluding to increase prices. Picture: Reuters

Tesco has always denied colluding to increase prices. Picture: Reuters

  • by CLAIRE SMITH
 

SUPERMARKET giant Tesco has been fined £6.5 million for its part in a dairy price fixing scandal, ending an investigation which has lasted more than a decade.

The penalty is substantially less than the initial £10m fine imposed on the supermarket after it won a partial victory against the Office of Fair Trading (OFT).

The Competition Appeal Tribunal (CAT) decided in December to overturn more than half of the findings by the OFT, that Tesco colluded with other retailers and suppliers to fix cheese prices.

It said at the end of last year that there was “insufficient evidence” that Tesco was involved in a concerted effort to rig cheese prices in 2003.

But the appeal tribunal upheld the OFT’s conclusion that Tesco was guilty of communicating its pricing to rival retailers through a supplier three times in 2002.

The latest CAT hearing brings to a close a long-running OFT investigation that has seen supermarkets and dairy processors pay £39m collectively in fines. The OFT estimated the collusion led to shoppers paying 2p more for a litre of milk and 2p more for 100g of cheese, although Tesco has always denied collusion. The scandal was calculated to have cost consumers £270m.

It has been a contentious investigation for the consumer watchdog, which was forced to make a £100,000 libel payout to supermarket Morrisons, after wrongly accusing the Bradford-based chain of an infringement in relation to milk, cheese and butter in 2002 and 2003.

Tesco threatened legal action against the OFT last August, after it was issued with a £10m fine for its role in the price-fixing scandal. The company said it reacted with “surprise and dismay” over the penalty and promised to defend its position “through the courts if necessary”.

The supermarket was among nine companies the watchdog judged to have colluded to rig the price of cheese and milk in 2002 and 2003.

The OFT intended to fine the guilty parties more than £116m, but reduced the penalties after a period of consultation in which some companies admitted liability. Supermarket chains Asda, Sainsbury’s and Safeway, and dairy processors Arla, Dairy Crest, McLelland, the Cheese Company and Wiseman all received lighter fines after admitting liability.

But Tesco has always denied that it colluded with the others.

Yesterday Tesco said the matter had been settled and it would be making a payment solely with regard to the three charges of informing competitors of its prices via a supplier. .

In a statement the Office of Fair Trading said: “The CAT upheld the OFT’s findings that Tesco broke competition law three times by co-ordinating increases in the prices consumers paid for cheese in 2002.

“The CAT also found that Tesco did not infringe the law in relation to a number of other findings of exchanges of future pricing information.”

A Tesco spokesman said: “Tesco is pleased that it has today settled the dairy competition appeal. Tesco will pay a reduced penalty of £6.5m in respect of three infringements of competition law The other findings of the OFT against Tesco have been dismissed.”

 

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