Retail giant threatens legal action after 'price-fixing' fine

Posted Aug 10, 2011 by Andrew John
Supermarket giant Tesco said it will fight a huge fine imposed by a regulator after it was accused of colluding with other retail outlets to fix prices of dairy products.
Tesco supermarket
Tesco supermarket
Creative Commons
It’s estimated the alleged collusion during 2002 and 2003 cost British consumers £270 million, says the BBC.
Tesco now says it will take legal action to fight the £10 million fine imposed by the Office of Fair Trading (OFT).
“The supermarket giant was one of nine firms facing penalties totalling close to £50m for colluding over the price of milk and cheese in 2002 and 2003,” says the BBC report. “But Tesco expressed ‘surprise and dismay’ that it was included in the penalties handed down by the regulator. Tesco denies it colluded with others.”
Consumers found themselves paying 3p more for a pint of milk, 15p more for half a pound of cheese and 15p more for half a pound of butter.
The other outlets said to have infringed the Competition Act are Arla, the Cheese Company, Dairy Crest, McLelland, Safeway (which has since been bought by Morrison’s), Sainsbury’s, Wiseman, and Asda.
Through the courts
They got lighter fines after admitting the collusion. Tesco denied it and now says it will fight the OFT’s fine “through the courts if necessary.”
The BBC said in 2007 that, although the prices of the products rose as a result of the alleged collusion, the prices paid to farmers did not increase.
Tesco said then that it would “vigorously” defend its position, which it said was different from that of its rivals.
“As we have always said, we acted independently and we did not collude with anyone,” said the retail giant’s executive director Lucy Neville-Rolfe.
A Press Association report says: “The scandal is thought to have cost consumers around £270 million. The OFT had initially intended to fine the guilty parties more than £116 million but scaled back the penalties after a period of consultation.”