Milk price-fixing case scaled back

AN INVESTIGATION into allegations that some major supermarkets fixed prices to make shoppers pay more for milk and butter has been dramatically scaled back, after the competition watchdog said there was insufficient evidence to pursue many of the claims.

The Office of Fair Trading also confirmed yesterday that it was to cut the multi-million pound fine it had imposed on some retailers, including Sainsbury's and Leeds-based Asda, after deciding to reduce the scope of the charges it was bringing.

All claims against Bradford-based Morrisons have been dropped.

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The move comes after several years of investigation into allegations involving milk and butter sales in 2002 and 2003.

The OFT will also now drop some allegations of price fixing against Tesco, having agreed a penalty discount with the company over the exchange of commercially sensitive information on some cheeses with suppliers.

Tesco does not accept the cheese allegations, but has said it will not contest them.

The other firms involved, Asda, Dairy Crest, Lactalis McLelland, Safeway, Sainsbury's, The Cheese Company and Wiseman, will now pay a total of 70m in fines, as compared with the 116m liability which had been imposed earlier.

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A spokesman for the watchdog said: "The OFT has decided to drop certain allegations against Tesco as part of its dairy investigation, at the same time as agreeing a penalty discount in recognition of Tesco notifying the OFT that it does not intend to contest the remaining aspects."

Tesco will now receive a 10 per cent discount on its penalty for agreeing not to challenge the claims. Tesco said it was delighted to have been cleared of the major allegations involving milk and butter.

The executive director of corporate and legal affairs, Lucy Neville-Rolfe, said: "We disagree with the OFT's views on cheese.

"We firmly maintain that we are innocent of all allegations against us and at no point sought to collude with other retailers or dairy processors on prices.

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"But given the passage of time and the cost of litigation, we are keen to bring this lengthy and costly process to a close.

"We have always competed hard to provide the best possible deal for customers and will continue to do so."

Robert Wiseman Dairies said its payment would be cut to 4.2m as a result of the moves, including a 35 per cent discount for co-operation. The company had earlier agreed to pay 6.1m in December 2007 "to remove the uncertainty of the investigation by reaching a settlement with the OFT".

Morrisons said welcomed the dropping of price-fixing allegations. A spokesman said: "Morrisons has always believed strongly that it had no case to answer, maintaining that the company was not involved in any initiative to increase the price of dairy products, and that it should never have been part of the OFT's inquiry.

"Morrisons has fully cooperated with the OFT's investigation, and has provided the OFT with evidence which conclusively exonerates Morrisons."