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The Office of Fair Trading has handed penalties to supermarkets and dairy firms after they admitted price fixing.

The OFT found evidence of collusion between supermarkets Asda, Morrisons, Safeway, Sainsbury's and Tesco and dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman on the retail prices of dairy products.

A number of these organisations have now admitted involvement in anti-competitive practices and have agreed to pay individual penalties which, combined, come to a maximum of over £116 million.

The supermarkets and dairy processors increased the retail prices of milk, butter and UK produced cheese. The OFT's provisional findings in September 2007 were that the collusion took place through the sharing of commercially sensitive information in 2002 and, in some cases, in 2003.

The OFT said it had concluded early resolution agreements with Asda, Dairy Crest, Safeway in relation to conduct before its acquisition by Morrisons, Sainsbury's, The Cheese Company and Wiseman.

All admitted involvement in certain of the anti-competitive practices identified by the OFT. They have accepted a liability in principle, and will pay penalties which amount to over £116 million. The OFT added, however, that they will receive a significant reduction if they continue to provide full co-operation.

The OFT said it had also taken into account information provided by the parties involved in the early resolution discussions which demonstrated the pressures they were under at this time to support dairy farmers.

Arla had previously applied to the OFT for leniency. The OFT said it would receive complete immunity from financial penalty if it continued to co-operate fully.

The OFT vowed to continue with its case against Lactalis McLelland, Morrisons and Tesco. All three will have a chance to defend themselves against the allegations before a further decision is taken on potential penalties.

Related links

• Office of Fair Trading