Asda, Sainsbury, Dairy Crest, The Cheese Company (Glanbia) and Robert Wiseman had agreed to pay substantial fines in 2007/8 after admitting involvement in anti-competitive practices over the price of liquid milk, value butter and UK-produced cheese in 2002-3.
However, citing “detailed representations and new evidence received”, the OFT has this morning concluded that its evidence is “insufficient to support an infringement finding with regard to liquid milk in 2002 and value butter in 2003”.
As a result, the penalties a number of firms caught up in the probe had agreed to pay will be reduced.
“The total penalties that the early resolution parties to the dairy investigation have now agreed to pay are in aggregate approximately £70m”, said a spokeswoman. This represented a 40% discount on the £116m they had originally agreed to pay, she added.
“This figure excludes Tesco, which did not come to an early resolution with us [unlike rivals Sainsbury and Asda],” she added.
However, the OFT is still investigating possible breaches of competition law relating to liquid milk in 2003 and UK-produced cheese in 2002/3, she said.
Tesco co-operates with cheese probe
Allegations against Tesco in relation to liquid milk in 2002 and 2003 and value butter in 2003 had been dropped, she added. However, Tesco is co-operating with the ongoing probe into UK-produced cheese.
“On being notified by Tesco that it does not intend to contest the provisional OFT findings of a breach of competition law relating to the exchange of commercially sensitive information on certain cheese lines with two of its cheese suppliers in 2002 and one of its cheese suppliers in 2003, the OFT has agreed a discretionary penalty discount of 10%.”
All allegations against Morrisons had been dropped, she added. “Morrisons was only involved in our investigation into liquid milk in 2002, and that investigation has now been dropped.”
Morrisons described this as a “vindication” of its position, adding: “Morrisons has always believed strongly that it had no case to answer.”
Wiseman’s fine has been reduced from £6.1m to £4.2m.
Waste of public money?
According to the OFT, supermarkets and processors colluded to increase the retail prices of milk, value butter and UK-produced cheese through the sharing of commercially sensitive information in 2002-3.
But the companies have always maintained that the so-called ‘Retail Price Initiatives’ of the time were designed to pass on extra money added to the retail price of milk back to the farmers at a time when the sector was facing particular challenges.
A source close to the case told FoodManufacture.co.uk:“There is a feeling that while on a technical level there were breaches, it was quite clear that the parties acted in good faith in this circumstance and as such, feel pretty aggrieved that the OFT should spend so much time and money pursuing this.”