Show Hide image

Tesco threatens legal action against government body

Tesco has been issued with a £10m fine for its alleged involvement in a price cartel, but threatens

The Office of Fair Trading (OFT) has issued fines of almost £50m to supermarkets and dairy companies including Sainsbury's, Asda, and Dairy Crest as punishment for price-fixing. However, Tesco, which has been issued with a £9.55m fine - one of the largest meted out by the OFT in this case - has contested the OFT's judgement, threatening legal action if the fine is not rescinded.

The OFT, in 2002-2003, found Arla, Asda, Dairy Crest, Lactalis McLelland, Safeway, Sainsbury's, Tesco, The Cheese Company and Wiseman guilty of price-fixing, in contravention of the Competition Act 1998. The charges against the companies involved price-fixing of milk and cheese, at a total cost to the UK consumer of an estimated £270m.

Price-fixing in this case allegedly working by an 'A-B-C information exchange', whereby supermarkets and cheese vendors shared their retail prices via their suppliers.

Arla early on admitted its involvement in anti-competitive practices, earning immunity from fining. The other companies also admitted their involvement, meaning their fines were reduced significantly, under the OFT's 'early resolution' and 'leniency' policies. The total fine of a collective £49.51m is a fraction the £116m original total.

Tesco has denied that it was party to the price cartel and has issued a condemnation of the OFT's powers.