On 10 August 2011, the Office of Fair Trading ("OFT") issued a decision concluding its investigation into dairy products retail pricing in the UK and imposing a £49.51 million (approximately €56.64 million) fine against four supermarkets and five dairy processors.
In its decision, the OFT found that Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury's, Tesco, The Cheese Company and Wiseman had infringed the Chapter I of the Competition Act by coordinating increases in dairy prices in 2002 and 2003.
The OFT found that the companies were involved in one or more of the following three infringements:
- Cheese in 2002 – Asda, Dairy Crest, Lactalis 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 – Asda, Lactalis McLelland (prior to its acquisition by Groupe Lactalis), Sainsbury's and Tesco.
- Fresh Liquid Milk in 2003 – Arla, Asda, Dairy Crest, Safeway (prior to its acquisition by Morrisons), Sainsbury's and Wiseman.
The infringements involved an indirect exchange of retail pricing intentions between the supermarket chains via dairy processors, a so-called "A-B-C information exchange" (also called "hub & spoke" cartel). A-B-C information exchanges arise, for instance, where retailer A passes information to supplier B, in order for supplier B to subsequently pass this information on to retailer C. The OFT's previous decisions in the Hasbro/Argos/Littlewoods and Replica football kits cases established the illegality of such practices. More recently, this type of pricing co-ordination between retailers and manufacturers was raised in the OFT's Tobacco products case.
Arla, which acted as a whistleblower to the OFT on the existence of these anticompetitive practices, benefited from complete immunity from fines under the OFT's leniency programme. Asda, Dairy Crest, McLelland, Safeway, Sainbury's, The Cheese Company and Wiseman all received reductions in their fines, either under the OFT's leniency programme and/or by agreeing to early resolution with the OFT. Tesco was the only company not to have cooperated with the OFT under either the leniency programme or through an early resolution agreement. The company was fined over £ 10 million and has announced that it will appeal the OFT's decision.
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