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Sainsburys and Asda have admitted fixing the price of dairy products with producers in the aftermath of the Foot and Mouth outbreak of 2001 following an investigation by the Office of Fair Trading (OFT).
The supermarkets and producers who have admitted liability will receive fines of £116 million, but these could be reduced if they continue to help the competition watchdog continue with its investigations against other supermarket groups and producers.
Morrisons and Tesco, the UK's biggest supermarket, are refusing to admit that they exchanged sensitive information regarding milk, cheese and butter prices in 2002 and 2003. Producer Lactalis McLelland has also refused to admit guilt. The case against those companies will continue.
Lucy Neville-Rolfe, executive director at Tesco, said: "We acted independently and we did not collude with anyone. Our position is different from our competitors and we are defending our own case vigorously. Our whole philosophy is to give a good deal to customers. We continue to deliver on this in a fiercely competitive market."
Arla, the dairy company which has been helping the OFT with its investigation, is to receive complete immunity from any fines as long as it continues co-operating with the watchdog.
Five supermarket groups and five dairy companies have been investigate by the OFT over allegations of exchanging commercially sensitive information between retailers in respect of milk, butter and cheese during 2002 and 2003. The collusion is thought to have cost British shoppers £270 million.
In a statement today, the OFT said that it was very pleased with the early co-operation of Asda, Dairy Crest, Safeway (now owned by Wm Morrison), Sainsbury's, The Cheese Company and Wiseman. The watchdog said that their co-operationg had enabled some of this case to be resolved effectively and swiftly, reducing the costs of the investigation to both the OFT and the businesses.
J Sainsbury said it would pay a £26 million fine to the OFT, which it said would help bring the investigation to a conclusion.
"We are disappointed that we have been penalised for actions that were intended to help British farmers, but recognise the benefit of a speedy settlement with the OFT," Mr King said.
"The price initiatives in 2002 and 2003, which were widely and publicly reported at the time, were designed to help British dairy farmers at a time of considerable economic pressure and public debate about whether farmers were getting a fair price for their products," he added.
In a statement, Asda said: "Everyone at Asda regrets what happened, particularly as we are passionate about lowering prices. Our intention was to provide more money for dairy farmers, who were under severe financial pressure at the time."
Dairy Crest said today that it expected to pay a significantly reduced fine of £9.4 million, after agreeing to co-operate with the OFT. The original penalty levied had been £14.5 million.
The Cheese Company, a niche hard cheese company, has also admitted that it will pay a maximum fine of £2 million, but expects this penalty to be substantially lower.
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We as a society are to blame for the rise of the supermarkets.I remember my father ,who was afarmer,saying in the eighties that supermarkets would eventually put many farmers out of business
robert smith, aberdeen, U.K.
The OFT shoud impose fines, but I would also like to see some individual accountability. Isn't price fixing now a criminal offence for which those found to be responsible for can be imprisoned?
Rodney, Lincolnshire, England UK
Let's not be naive, supermarkets will not lose by this fine, they will up the price of other goods by a few pennies to recoup the loss. The real gain is the Government coffers. Make these offences imprisonable, not levy fines. Put the CEO's behind bars, that may deter they from permitting these activities.
Stuart Kelly, Sutton Coldfield,
Win - Win - Lose
Win - Gov't pocket's the fines.
Win - Supermarkets & business - net gain (profit - fines).
Lose - Farmers have been cheated and get nothing .
So what's new?
Mark - Wrexham
Mark, Wrexham, U.K.
As an employee of Sainsburyâs, I know from experience "they" are indeed driven by profit+greed & corruption is rife throughout. These claims are well founded! I have evidence showing "Sainsbury's" has+will falsify data to protect their own interests! So,feel no pity for them or any other co implicated in this,as they have no empathy or compassion for the avrg dairy farmer,shopper,or employee &-I agree with Kerome, London.
Im aware Mr King, CEO turns a blind eye to (at times, obvious) illegalities from all levels,has selective memory when enforcing their published "Corp Responsibilities" &"Fair Treatment Policy" to (some,not all) highly unscrupulous line managers with too much access to various personnel data. This's easily abused to weaken& degrade others (inc their own staff) if its in their co interests to do so? However,bad reputation=bad for business+shareholders! Any available power or resource will be used! So, keep in mind, Sainsbury's are a major £ backer of the Labour Gov...
Elizabeth, Glasgow, Scotland, Uk
The Asda)/Sainsbury et al rip-off is just another example of what companies will do when they are driven by sheer 'Greed'. But if my arithmetic is right, it pays to be greedy. In this respect the supermarket groups and their friends pocketed over £300 million ($600 million plus), but where they were only fined jointly no more than £116 million ($235 million). Even if they broke even with their illegal and rip-off transactions, one does not have to be an Einstein to know that this certainly isn't a deterrent by any means. Therefore the greed will just continue and where as the supermarkets have so much dominance and power now, the people will just have to accept it and pay up. Unfortunately for humankind this greed is far more sinister than it appears at face value, for if you look at how the world's resources are being exploited at an alarming rate by corporates, this greed will be the eventual undoing of the human experience itself.
Dr David Hill
World Innovation Foundation
david hill, Bern, swiss
Don't fine them- there are far more important things to investigate than a few supermarkets giving a few extra pennies to hard-up British farmers.
If they have to be fined, then rather than the money going to the OFT, perhaps it would be better to distribute the money to Sainsburys/necter card holders in the form of vouchers-maybe even milk vouchers!
Sarah, Scarborough,
Erm....we, the customers have overpaid £270 million- any chance of getting any of it back?
A Walden, whitstable,
good, they have plenty of money in profits from us consumers.
should be ashamed of price fixing on items are are our daily necessary requirements. Milk and bread....both at high prices
sanj, london, uk
If the supermarkets have been found to "price fix" on milk/dairy products, what else (among the 1000's of lines they carry) will they have "price fixed" on also? Secondly, are the supermarkets compounding issue of using sweatshops around the world (with the High street retailers) to maximise profits at the cost of everything else?
Confused consumer, London, UK
If you read the side of a tesco milk bottle it actually says they are committed to paying a fair price to their farmers. the fact that the supermarkets were paying more was publicised at the time, and was in response to previous criticism in the press of using their positions to force the farmers to sell the milk at an extremely low price. It seems the supermarkets can't win whatever they do. We are far from riped off by them and the cost of food now is comparitively much lower than what it was before they started competing so vigorously.
ZE, Oxford,
Absolutely outrageous. That really comes down to defrauding the public, and skimming a nice profit from every man, woman and child in the country... I hope they fine the supermarkets at least what they got in profits plus a big punitive amount. Anything less would send completely the wrong message.
The large supermarkets already have huge advantages in the market from economies of scale and placement of their own brand products, they *really* do not need to do this kind of thing to stay profitable, and the regulators should come down hard on them when they do.
Kerome, London,
So, a couple of supermarkets have admitted to fixing the price of milk and are fined. What's going to happen to the legion of MPs who have admitted to receiving illegal payments for their election campaigns?
Nobby Clark, Perth,
It's all very well fining the companies after the event but that doesn't put the money back in the shoppers pocket does it?
If the overcharging went on for 2 years the price should now be set at a similar amount below the correct market price and held at that level for the same period.
Can't see the Government going for that though as no doubt they will be pocketing the fines and checking their travel brochures to see what they can squander it on.
Graham, Pattaya, Thailand
DIARY producers eh? Like filofax you mean?....haha
peter rabbage, gloucester, UK
And that charge will simply be levied on us the consumer - why not float the idea of prison terms for top management who are found guilty of such price fixing instead of fines. We need a real disincentive to protect our rights.
Farrukh, Woking, UK