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Supermarkets 'fixed dairy prices' Supermarkets 'fixed dairy prices'
(about 2 hours later)
The UK's big four supermarkets and dairies colluded to keep the price of dairy goods artificially high, the Office of Fair Trade (OFT) has found. The UK's big four supermarkets and dairies colluded to keep the price of dairy goods artificially high, the Office of Fair Trade (OFT) has said.
The price-fixing deal led to consumers overpaying for milk, cheese and butter by an estimated £270m, the OFT said.The price-fixing deal led to consumers overpaying for milk, cheese and butter by an estimated £270m, the OFT said.
Asda, Tesco, Morrisons, Sainsbury's and processors including Dairy Crest and Arla were involved, the watchdog said.Asda, Tesco, Morrisons, Sainsbury's and processors including Dairy Crest and Arla were involved, the watchdog said.
It added stores and processors had already been warned the practice would limit competition and raise prices. However, the British Retail Consortium said there had been no attempt to "rip off the public".
The companies involved in the competition inquiry could face heavy fines if the matter is proven.
"This is a very serious case," said OFT executive director Sean Williams."This is a very serious case," said OFT executive director Sean Williams.
"This kind of collusion on price is a very serious breach of the law.""This kind of collusion on price is a very serious breach of the law."
According to the OFT, stores and processors had already been warned the practice would limit competition and raise prices.
'Deterrent''Deterrent'
Mr Williams added that the watchdog would ensure it used its powers to punish such behaviour and "deter other businesses from taking such actions".Mr Williams added that the watchdog would ensure it used its powers to punish such behaviour and "deter other businesses from taking such actions".
It added it had written to Asda, Morrisons, Safeway, Sainsbury's and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman setting out its findings. What we were trying to do was to ensure that at least we could get the farm gate price up a bit to help preserve the supply line Kevin Hawkins, British Retail Consortium
The Competition Act of 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK.
The OFT has written to Asda, Morrisons, Safeway, Sainsbury's and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman setting out its findings.
It is now awaiting their responses to the claims, and any objections.It is now awaiting their responses to the claims, and any objections.
Following an investigation the OFT said it had found the groups had shared "highly commercially sensitive information, including details of the levels of price increases, over a two year period of 2002 and 2003".Following an investigation the OFT said it had found the groups had shared "highly commercially sensitive information, including details of the levels of price increases, over a two year period of 2002 and 2003".
The watchdog said it was "committed to sorting out the case as soon as possible," and hoped to issue a final decision by late 2008, if not earlier. Morrisons said it was too early to comment fully, but chairman Sir Ken Morrison said he believed the group had never been involved with any of the actions mentioned by the OFT.
Sir Ken also said that any Safeway involvement was another issue as it would have come prior to the chain's acquisition by the group.
Tesco added it would "vigorously defend" any claims it had not acted in the best interest of shoppers.
'No rip-off'
The British Retail Consortium (BRC) insisted there had been no attempt to "rip off the public" adding prices had been raised at the time to help ease pressure on farmers hit by low milk prices.
"What we were trying to do was to ensure that at least we could get the farm gate price up a bit to help preserve the supply line," BRC director general Kevin Hawkins told the BBC.
However, Sean Rickard, a consultant to the dairy industry and former chief economist at the National Farmers' Union, questioned whether farmers had actually seen the benefit of the price increases.
"If one looks back at the data, it does appear that there does seem to have been an increase in retail prices, even an increase in processors' margins, but the dear old dairy farmers really saw no tangible benefit, no lasting benefit from any such move," Mr Rickard added. "If it did take place, it wasn't of benefit to farmers."
The OFT said it was "committed to sorting out the case as soon as possible," and hoped to issue a final decision by late 2008, if not earlier.