Supermarkets accused of dairy price fixing
Leading supermarkets have been accused of working together to keep the price of dairy products artificially high.
The Office of Fair Trading (OFT) has provisionally ruled that Tesco, Asda, Sainsbury's and Morrisons colluded with dairy processors Arla, Dairy Crest, Lactalis McLelland, the Cheese Company to increase the prices of products such as milk, cheese and butter.
The price fixing, which took place over a two-year period in 2002 and 2003, is said by the OFT to have cost consumers around £270m, while the prices paid to dairy farmers did not increase.
The accusation that supermarkets have been conspiring to keep some prices high will be grimly ironic to the pub trade and MPs, who have linked low supermaket beer prices and aggressive promotions to problem drinking.
Many pubs will also have been directly affected by the high prices. Research for the annual Publican Food Report shows that half of pubs routinely use supermarkets and shops for food supplies.
The OFT has written to the supermarkets and producers, and will review their responses and any third party comments before finally ruling if the law has been breached. The watchdog has the power to impose heavy fines on the companies if the findings are confirmed.
OFT executive director Sean Williams said he "hoped" the price fixing was not still taking place, adding: "This kind of collusion on price is a very serious breach of the law.
"Businesses should understand that where we find evidence of this kind of anti-competitive activity we will use the powers at our disposal to punish the companies involved and to deter other businesses from taking such actions."
