Dairy products: investigation into retail pricing practices
Office of Fair Trading (OFT) closed Competition Act 1998 case.
Investigation into certain large supermarkets and dairy processors regarding retail pricing practices for certain dairy products
Case reference: CA98/03/2011 (Case CE/3094-03)
The OFT issued a decision in which it found that certain supermarkets and cheese processors infringed competition law and imposed penalties totalling almost £50 million. Tesco has filed an appeal against that decision in the Competition Appeal Tribunal. No other party appealed.
The OFT published a non-confidential version of its decision
On 10 August 2011 the OFT issued an infringement decision against Arla, Asda, Dairy Crest, McLelland (prior to its acquisition by Groupe Lactalis), Safeway (prior to its acquisition by Morrisons), Sainsbury’s, Tesco, The Cheese Company and Wiseman. In that decision, the OFT found that the parties had infringed the Competition Act 1998 by coordinating increases in the prices consumers paid for certain dairy products in 2002 and/or 2003. The OFT found three infringements were committed and imposed penalties totaling £49.51 million.
The infringements related to:
Cheese in 2002 - involving Asda, Dairy Crest, McLelland (prior to its acquisition by Groupe Lactalis), Safeway (prior to its acquisition by Morrisons), Sainsbury’s, Tesco and The Cheese Company
Cheese in 2003 - involving Asda, McLelland (prior to its acquisition by Groupe Lactalis), Sainsbury’s and Tesco
Fresh Liquid Milk in 2003 - involving Arla, Asda, Dairy Crest, Safeway (prior to its acquisition by Morrisons), Sainsbury’s and Wiseman
Tesco has appealed the OFT’s decision in relation to the infringement findings and the level of financial penalty the OFT imposed on Tesco. No other party has appealed.
On 20 September 2007, the OFT issued a statement of objections (SO) alleging that the parties had coordinated retail prices’ increases for certain dairy products in 2002 and/or 2003, in breach of the Chapter I prohibition.
On 7 December 2007 and on 15 February 2008, the OFT announced that it had reached early resolution agreements with seven of the parties, who had admitted involvement in anti-competitive practices and had agreed to pay individual penalties which came to a combined maximum of over £120m before discounts.
On 23 July 2009, the OFT issued a supplementary statement of objections (SSO), setting out additional evidence in support of the OFT’s allegations.
On 30 April 2010, the OFT announced that, following representations and new evidence, the evidence it had on file was insufficient to support an infringement finding with regard to some of the allegations. At that stage, there were no parties contesting the OFT’s provisional findings and a decision was expected by autumn 2010.
Tesco subsequently made representations on the OFT’s provisional infringement findings for the remaining allegations against it. The OFT carefully considered these representations as well as the evidence in the case as a whole.
On 10 August 2011, the OFT announced its infringement decision, imposing penalties totalling almost £50 million.
Further information on this closed case can be found on The National Archives’ website.