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Supermarkets fined for fixing prices of milk and cheese

Those fined include Asda, Sainsbury’s and Tesco

Milk carton

Supermarkets and dairy processors including Asda, Sainsbury’s and Tesco have been fined a total of £49.51 million for fixing the prices of certain dairy products.

UPDATE 04/01/2013: On 20 December 2012, the Competition Appeal Tribunal cleared Tesco of its involvement in the price fixing of cheese in 2003 finding ‘insufficient evidence to support a number of conclusions reached by the OFT’. However, it concluded that Tesco was guilty of sharing future pricing information with rival retailers via suppliers three times in 2002. A further hearing will take place in 2013.

The Office of Fair Trading (OFT) found that the price fixing ‘was achieved by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors’.

Which? executive director Richard Lloyd says: ‘Any sort of collusion between retailers and suppliers that harms the consumer is unacceptable. These penalties send a clear signal that price fixing is bad for consumers and that the regulator is willing to take tough action. This is especially important at a time when so many people are already struggling with rising food prices.’

The latest research from Which? found that rising food prices are forcing UK consumers to make changes to their shopping habits and 84% of people are worried about the rising cost of food.

Biggest fines

The OFT found that three infringements of the Competition Act were committed – concerning cheese prices in 2002, cheese prices in 2003 and milk prices in 2003. Not all companies were involved in all three infringements.

It has imposed the biggest final penalty of £11.04 million on Sainsbury’s, followed by Tesco at £10.43 million and Asda at £9.39 million. Five other companies have been fined, including Dairy Crest, The Cheese Company and Safeway (now owned by Morrisons).

Maintaining competition

OFT Chief Executive John Fingleton welcomed the co-operation provided by some of the companies involved in the investigation, and has warned that the OFT will take action where necessary.

He 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.

‘Competition in the supermarket sector is generally intense and has delivered significant benefits to shoppers across the UK in terms of innovation, choice and improved value for money. Our investigation and this final decision will help ensure that this competition is maintained.’

Rising cost of food

For more information on the rising cost of food, how this is affecting consumers and how Which? is campaigning to ensure that consumers don’t have to absorb the cost of food price increases unnecessarily, see our guide to food price rises.

Have you changed your grocery shopping habits? Are you substituting premium products for value goods? Join the budget vs premium food debate on Which? Conversation.

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