OFT slams dairy price fixing

Last Modified: 20 Sep 2007
By: Krishnan Guru-Murthy

Major supermarket chains and dairy producers colluded to raise prices on milk, butter and cheese to the tune of £270 million, according to Britain's consumer watchdog.

The Office of Fair Trading has provisionally ruled that Asda, Sainsbury's, Tesco and Morrisons, along with several large dairy processors, fixed prices over a two-year period.

The supermarkets are yet to officially respond, but all have said they will vigorously defend the allegations, which if proven could land them with heavy fines.

But the OFT said their evidence was clear - the retailers' gain was at the expense of both customers and farmers.

Speaking to Channel 4 News, Kevin Hawkins, director-general of the British Retail Consortium defended the supermarkets, saying they were "not guilty".

He said a huge surplus of milk on the market in 2002 had meant many dairies cut the price they paid their farmers and many farmers started to leave the industry.

He addmitted Safeway had raised its price to consumers by 1p or 2p a litre to help farmer, but that it acted alone and not in collusion with other supermarkets.