Tesco enraged by £10m fine from OFT

Supermarket has consistently protested its innocence in the row over dairy market price fixing and called yesterday for a complete overhaul of the regulatory system

Tesco came out fighting yesterday, effectively calling for the Office of Fair Trading to be broken up after the watchdog slapped a £10m fine on the supermarket chain for colluding to fix cheese prices between 2002 and 2003.

The UK's biggest grocer reacted with "surprise and dismay" to the OFT's ruling that it had colluded with suppliers and other retailers, adding that the judgement was "entirely without substance".

The OFT conducted a seven-year inquiry into the matter, which it has concluded by fining eight parties a total of £49.81m for infringing the Competition Act of 1998.

While whisteblower Arla was given complete immunity from a fine, Asda, Dairy Crest, McLelland, Safeway (prior to its acquisition by Morrisons in 2004), Sainsbury's,, The Cheese Company and Wiseman received more lenient fines after admitting liability. But Tesco has always contested the ruling and was fined £10.43m.

John Fingleton, the OFT's chiefexecutive, said: "This decision sends a strong signal to supermarkets, suppliers and other businesses that the OFT will take action and impose significant fines where it uncovers anti-competitive behaviour aimed at increasing the prices paid by consumers."

The OFT judged the nine parties colluded to rig the price of cheese in 2002 and 2003, as well as fresh liquid milk in the latter year, which ended up costing consumers an extra £270m. Some grocers, such as Sainsbury's and Asda, were involved in all three activities, while Wiseman was embroiled in just the 2003 milk inquiry.

However, Lucy Neville-Rolfe, Tesco's director of corporate and legal affairs, said: "We are disheartened and disturbed that the OFT continues to pursue this costly and time consuming case at the expense of both the taxpayer and UK business."

She added: "We have always said we did not collude on prices on cheese and we stand firm in our rebuttal of these ongoing allegations. We will continue to defend our position vigorously, through the courts if necessary."

Tesco pointed out that the OFT last year dropped its allegation about collusion over milk prices in 2002 and butter in 2003 against all parties, as well as its 2003 milk allegation against the grocery giant.

The price fixing investigation followed a sustained and very public campaign by dairy farmers between 2001 and 2003 demanding higher milk prices at the farm gate. Tesco said the OFT had made its decision on the pricing of cheese, despite the grocer's insistence – backed by "firm evidence" – that it didn't collude with other retailers.

"We surely have now reached the stage where the absurdity of the OFT operating as investigator, prosecutor and judge cannot be allowed to continue," Ms Neville-Rolfe said. "The Government's plans for the new competition regime must address this anomaly, in the interests of the consumer and the business community."

The Government plans to merge the Competition Commission and the OFT to create a single agency, the Competition and Markets Authority.

Tesco said it has two months todecide whether it would appeal, but said "our expectation is that we will". Such a hearing would take place at the Competition Appeal Tribunal and the appeal process could take up to a year.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Administration Team Leader

Negotiable: Recruitment Genius: This company prides itself on its ability to p...

Recruitment Genius: Mortgage Advisor

Negotiable: Recruitment Genius: This company prides itself on its ability to p...

Ashdown Group: Solvency II Project Manager - 10 month contract - £800 p/d

£800 per day: Ashdown Group: A highly successful, global financial services co...

SThree: Trainee Recruitment Consulant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

Day In a Page

A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

A Very British Coup, part two

New novel in pipeline as Jeremy Corbyn's rise inspires sequel
6 best recipe files

6 best recipe files

Get organised like a Bake Off champion and put all your show-stopping recipes in one place
Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Atwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open