Suppliers warned that loose talk could cost them dearly

The kind of 'unlawful information exchange' highlighted in the recent dairy price fixing case is standard practice in the food industry, some manufacturers have claimed.

Their comments came as Asda, Sainsbury, Dairy Crest, The Cheese Company and Robert Wiseman agreed to pay substantial fines for sharing commercially sensitive data in 2002-3.

Suppliers quizzed by Food Manufacture​ said that conversations about what competitors were doing on price were commonplace. One chilled food manufacturer said: "These discussions go on all the time, and no, I don't think everyone knows where the line should be drawn. Sometimes they happen when your back is against the wall. They can also backfire. If you tell a customer that you know for sure that his rivals will increase prices next week, it might make him less likely to budge in a negotiation."

Manufacturers also routinely talked to each other on an informal basis about pricing, said one interim manager: "The first thing that comes up in a negotiation with a retailer is what your rivals are doing. If you've been moving around the industry you build up a network of contacts and you talk. You do whatever you can to get leverage."

One anti-trust lawyer said many account managers did not realise that discussions with one trading partner about details of pricing arrangements with another were strictly off limits.

She said: "Retailers routinely use suppliers as a means of information exchange, whereby two or more rivals will communicate via a third party: the supplier. The problem is that manufacturers are put under immense pressure to discuss this kind of information and do not realise that they could be breaching the Competition Act."

Caroline Hobson, a solicitor at law firm Cameron McKenna, said: "What matters is whether companies are using third parties as conduits to find out what competitors are doing in a co-ordinated fashion. Sometimes this information is also received anonymously."

However, the Office of Fair Trading (OFT) rejected suggestions that companies could unwittingly fall foul of competition law. Indeed, the firms involved in the dairy price-fixing case approached the OFT for advice about the legality of the so-called 'retail price initiatives' in 2002-3, it claimed. "We gave them legal advice. It has become apparent they chose not to listen to it."

Tesco, Morrison and Lactalis McLelland are still contesting the allegations. Arla Foods, as the 'whistleblower' in the case, will not have to pay a fine.

Tesco said: "We acted independently and did not collude with anyone. Our case is different from our competitors and we are defending it rigorously."