Woolworths fined £350,000 by FSA

The penalty relates to a variation to the terms of a major supply contract at the retailer’s wholesaling subsidiary EUK. The effect of the variation was to reduce Woolworths’ profits for the year 2006/2007 by an estimated£8 million.

In a statement, the FSA said: “This was inside information, as it was likely to have a significant effect on Woolworths’ share price and should therefore have been disclosed to the market as soon as possible. Woolworths’ failure to identify inside information and subsequently disclose this information until its scheduled Christmas trading update on January 18, 2006 created a false market in its shares.”

FSA director of enforcement Margaret Cole said: “Clean, efficient and orderly markets depend on timely and proper disclosure of relevant information. Woolworths’ failure to disclose vital information led to a false market in its shares for 29 days. This sort of failure is unacceptable.”

In a statement, the retailer said: “Woolworths accepts the judgement and has decided not to appeal the decision through the Financial Services and Markets Tribunal. This decision was taken in view of the significant costs – both in financial terms and in management time – involved in an appeal.

“The company is pleased to note the FSA’s finding that the breach was not deliberate.”

Woolworths will take the fine as an exceptional charge in this financial year.