OFT fines Sainsbury's and Asda for milk price fixing

The Office of Fair Trading has concluded early resolution agreements with Asda, Sainsbury’s, Safeway – prior to its acquisition by Morrisons – The Cheese Company and Wiseman based upon the OFT’s provisional findings.

Tesco and Morrisons still have to make final representations to the OFT and agree their fines.

In a statement, the OFT said: “These parties have all admitted involvement in certain of the anti-competitive practices identified by the OFT in the Statement of Objections and have undertaken to co-operative fully with the OFT in its investigation, including providing further evidence as far as reasonably possible.”

This morning, Sainsbury’s confirmed that it has agreed to pay a settlement of£26 million to the OFT relating to its investigation into dairy retail price initiatives for milk and cheese in 2002 and 2003, in a statement to the stock exchange.

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.”

An Asda spokesman said: “Everyone at Asda regrets what happened, particularly as we are passionate about lowering prices. Our intention was to provide more money for dairy farmers, who were under severe financial pressure at the time.

These issues concern all the major supermarkets but we've chosen to settle this matter quickly because we believe it’s the right thing to do for our customers.”

Asda does not have to disclose the actual fine because it is not publicly listed.

Tesco executive director Lucy Neville-Rolfe, said: “We are pleased the OFT recognises that the inquiry relates to very special circumstances when there was pressure from government to act and industrial action by farmers to increase milk prices.

However as we have always said, we acted independently and we did not collude with anyone. Our position is different from our competitors and we are defending our own case vigorously. Our whole philosophy is to give a good deal to customers. We continue to deliver on this in a fiercely competitive market.”