Watchdog drops some Tesco price-fixing claims

The competition watchdog today said it was dropping some allegations of price fixing against Tesco as part of a dairy investigation that has seen rival firms handed fines of around £70 million.

The Office of Fair Trading today said there was insufficient evidence to pursue the claims involving milk and butter sales in 2002 and 2003.

But the regulator said it had agreed a penalty discount with the supermarket giant over the exchange of commercially sensitive information on some cheeses with suppliers in 2002 and 2003.

Tesco does not accept the cheese allegations but has said it will not contest them.

The OFT said it had also reduced the scope of its charges against other firms in the dairy investigation, meaning those that had accepted liability would now share a reduced fine of approximately £70 million.

These firms are Asda, Dairy Crest, Lactalis McLelland, Safeway, Sainsbury's, The Cheese Company and Wiseman.

Claims against Morrisons have been dropped.

The watchdog said: "The OFT has decided to drop certain allegations against Tesco as part of its dairy investigation, at the same time as agreeing a penalty discount in recognition of Tesco notifying the OFT that it does not intend to contest the remaining aspects."

Tesco will now receive a 10% discount on its penalty for agreeing not to challenge the claims.

The other parties to the investigation are also in line for a penalty reduction, providing they continue to cooperate with the inquiry, which is set to conclude by early summer.

Tesco said it was "delighted" to have been cleared of the major OFT allegations involving milk and butter.

Lucy Neville-Rolfe, executive director of corporate and legal affairs, said: "We disagree with the OFT's views on cheese.

"We firmly maintain that we are innocent of all allegations against us and at no point sought to collude with other retailers or dairy processors on prices.

"But given the passage of time and the cost of litigation, we are keen to bring this lengthy and costly process to a close.

"We have always competed hard to provide the best possible deal for customers and will continue to do so."

The OFT had previously said the fines against the seven firms that accepted liability would be £116 million, but the decision that there was not enough evidence to support certain aspects of its investigation has reduced the sum.

Robert Wiseman Dairies said its payment would be cut to £4.2 million as a result of the moves, including a 35% discount for co-operation.

The company had earlier agreed to pay £6.1 million in December 2007 "to remove the uncertainty of the investigation by reaching a settlement with the OFT".

Morrisons also welcomed the decision to drop all claims against it.

"Morrisons has always believed strongly that it had no case to answer, maintaining that the company was not involved in any initiative to increase the price of dairy products, and that it should never have been part of the OFT's inquiry," the supermarket said.