7 December 2007

3 minute read

Europe

Following the OFT's Statement of Objections which provisionally found evidence of collusion between Asda, Morrisons, Safeway, Sainsbury's and Tesco and some dairy processors also, a few of these parties 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.

With a view to maintaining strong and effective competition law, the OFT will continue with its case against the remaining parties.

The SO set out the OFT's provisional findings that certain large supermarkets and dairy processors have colluded to increase the retail prices of one or more of liquid milk, value butter and UK produced cheese. The OFT's provisional findings were that the collusion took place through the sharing of commercially sensitive information in 2002 and, in some cases, in 2003. Details on the scope of the OFT's infringement allegations are set out below.

The OFT has now concluded early resolution agreements with Asda, Dairy Crest, Safeway (in relation to conduct prior to its acquisition by Morrisons), Sainsbury's, The Cheese Company and Wiseman based upon the provisional findings made in the SO. These parties have all admitted involvement in certain of the anti-competitive practices identified by the OFT in the SO and have undertaken to co-operate fully with the OFT in its investigation, including providing further evidence as far as reasonably possible.

These parties have accepted a liability in principle, and will pay penalties which amount to a maximum of over £116 million. However each party will receive a significant reduction in the financial penalty that would otherwise have been imposed on it, on condition that it continues to provide full co-operation.

The OFT has 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.

The OFT is very pleased that the early and constructive cooperation of Asda, Dairy Crest, Safeway, Sainsbury's, The Cheese Company and Wiseman, has enabled some of this case to be resolved effectively and swiftly, which will significantly reduce the costs of pursuing the investigation to the OFT and to the businesses concerned. This case demonstrates the flexible approach the OFT is prepared to take to reduce the burden of investigations, while maintaining strong and effective competition law enforcement.

Arla had previously applied to the OFT for leniency and will receive complete immunity from financial penalty if it continues to fully co-operate.

The OFT will continue with its case against Lactalis McLelland, Morrisons and Tesco. These parties have an opportunity to make representations on the OFT's provisional findings. The OFT will carefully consider any representations, and the evidence in the case as a whole before reaching any final decision.

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