The Office of Fair Trading today apologised to Morrisons and agreed £100,000 damages after the retailer was wrongly identified in a price-fixing probe.
The watchdog announced the settlement after Morrisons took legal action over a press release issued in September by the OFT at the same time as a statement of objections against a number of large supermarkets and dairy processors.
The release incorrectly stated that Morrisons was the subject of a provisional finding of infringement in relation to the supply of butter and cheese in 2002 and 2003. It also said the supermarket had previously been warned by the OFT against anti-competitive behaviour, which was not the case.
In fact, the only allegation relating to Morrisons involved liquid milk products in 2002.
The watchdog said today: "The OFT regrets that the press release contained these serious errors, and wishes to apologise sincerely to Morrisons for their publication."
The OFT agreed to pay Morrisons £100,000 in settlement of the defamation action and to pay the supermarket's costs in relation to the judicial review and defamation actions launched by Morrisons.
Supermarkets Asda, Sainsbury's and Safeway, prior to its takeover by Morrisons, as well as a number of dairies, have already admitted price-fixing during 2002 and 2003.
The firms will pay combined fines of more than £120 million, with dairies Robert Wiseman, Dairy Crest and The Cheese Company also found provisionally guilty by the OFT last September.
But retailers Tesco and Morrisons are still fighting the OFT claims.
Morrisons said at the time of the findings last autumn that it did not believe it was involved in any price-fixing collusion.
It said in a statement that objections will be made that Morrisons "should not be a part of this inquiry and that Morrisons inherited from Safeway a matter not of its making or doing".
The OFT has already issued a clarification of its statement of objections, stressing that the provisional findings relating to Morrisons concerned milk products in 2002 only.