OFT climbs down in dairy investigation

30th Apr 2010 07:09

The Office of Fair Trading has dropped most of its charges of price-fixing against Tesco, Morrisons and other dairy product suppliers between 2002 and 2003 even though the majority of firms accused had already agreed to pay fines.The watchdog added that after receiving new evidence, it concluded it cannot support the charge the firms colluded in the supply of liquid milk and butter in 2002 and 2003. The investigation into cheese products is still ongoing and will conclude in the summer.The watchdog said that penalties already agreed with firms that settled early will be reduced from £116m to £70m, while action against Morrisons, which always contested the charge, has been dropped altogether.Allegations against Tesco over collusion with milk and butter suppliers have also been dropped after it provided new evidence, while a penalty for charges relating to cheese supply will be cut by 10% after Tesco agreed not to contest them. In 2007 and 2008, the OFT agreed settlements with a number of parties who accepted liability in principle for a breach of competition law in relation to one or more of liquid milk, value butter and UK produced cheese in 2002 and/or 2003. Each party will get a penalty reduction provided it continues to cooperate with the OFT, the watchdog said. Dairies operator Robert Wiseman had agreed to pay £6.1m in December 2007, but will see its fine cut by £1.9m to £4.2m. That also includes a 35% discount for cooperating with the investigation.Supermarket group Morrisons has welcomed the OFT's decision, adding that it believes it should never have been part of the enquiry in the first place.