Supermarkets admit milk price fixing

Supermarket groups Sainsbury's and Asda have admitted fixing the price of dairy products including milk, cheese and butter after striking a deal with the Office of Fair Trading (OFT)

The supermarkets, as well as suppliers Dairy Crest, the Cheese Company and Wiseman, have agreed to pay total fines of around £116m following the OFT investigation launched earlier this year.

Another dairy supplier, Arla, has been given immunity from fines if it continues to co-operate with the investigation .

However, cases against Tesco, Morrisons and dairy firm Lactalis McLelland are to continue after they failed to agree early resolution terms with the OFT.

The supermarkets and suppliers have argued the price agreements, which date back to 2002 and 2003, were put in place to support farmers. However, the OFT said in September that customers were charged 3p extra for a pint of milk and 15p extra per quarter pound of butter as a result, in breach of competition law.

Sainsbury's chief executive Justin King said: 'We are disappointed that we have been penalised for actions that were intended to help British farmers, but recognise the benefit of a speedy settlement with the OFT.

"The price initiatives in 2002 and 2003, which were widely and publicly reported at the time, were designed to help British dairy farmers at a time of considerable economic pressure and public debate about whether farmers were getting a fair price for their products."