Supermarkets and Dairy Firm Fined GBP 116m Over Price Fixes

By IAN SWANSON

SUPERMARKET giants Asda and Sainsbury’s and Scottish dairy company Robert Wiseman were today facing multi-million pound fines after they admitted fixing the price of milk, cheese and butter.

They were among a group of major supermarkets and dairies to admit colluding over prices and have agreed to pay combined fines of more than GBP 116 million. Sainsbury’s alone will pay watchdogs a settlement of GBP 26m.

Other firms that have held up their hands in the investigation by the Office of Fair Trading include Safeway, prior to its takeover by Morrisons; Dairy Crest; and The Cheese Company.

The matter relates to pricing during 2002 and 2003, which is estimated to have cost consumers about GBP 270m.

The OFT said it was pleased to have reached “early resolution” agreements which will give the firms substantial discounts on the fines they would otherwise have faced, provided they continue to co- operate fully.

The OFT will continue with its case against supermarkets Tesco and Morrisons and dairy company Lactalis McLelland, which have not admitted to price fixing.

Robert Wiseman Dairies has agreed to pay a fine of GBP 6.1m for its part in “retail price initiatives” which involved the dairies and supermarkets sharing information to keep the prices of milk, cheese and butter artificially high.

But the East Kilbride-based company insisted its involvement resulted in no extra profit and was driven by a wish to provide support for hard-pressed farmers.

Alan Wiseman, chairman of Robert Wiseman Dairies, said: “The intention of the retail price initiatives was to provide support for farmers at a time of crisis, and every penny of additional revenues paid to Wiseman was passed directly to our suppliers.

“Whilst we are disappointed with the outcome of the investigation, this agreement removes a long shadow hanging over the company, and we now look forward to the group’s continued growth and success.”

Sainsbury’s said its action to collude over prices was designed to help dairy farmers at a time when they were under financial strain, following the devastating foot and mouth outbreak in 2001.

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.

“The price initiatives in 2002 and 2003, which were widely and publicly reported at the time, were designed to help British dairy farmers at a time of considerable economic pressure and public debate about whether farmers were getting a fair price.”

Asda said in a statement its intention was also 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,” it added.

Both supermarkets have since formed segregated supply chain schemes to help ensure dairy farmers are paid a premium and to provide greater efficiencies by working more closely with dairies.

(c) 2007 Evening News; Edinburgh (UK). Provided by ProQuest Information and Learning. All rights Reserved.