Tesco fights back as OFT orders it to pay £10m fine

The company said it reacted with 'surprise and dismay' over the decision by the OFT to include it in penalties totalling nearly £50m (GETTY IMAGES)

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

Tesco said the judgement was "without substance".

The OFT conducted a seven-year inquiry and fined eight parties a total of £49.81m

John Fingleton, the OFT's chief executive, 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 said nine parties colluded to rig cheese prices in 2002 and 2003, as well as milk in 2003 – which cost consumers an extra £270m.

Lucy Neville-Rolfe, director of corporate and legal affairs at Tesco, said: "We have always said we did not collude on prices on cheese and we stand firm in our rebuttal ... We will continue to defend our position vigorously, through the courts if necessary."

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.

Tesco said it has two months to decide whether it would appeal, but said "our expectation is that we will".

An appeal process by the supermaket giant could take up to a year.