OREANDA-NEWS. On October 22, 2007 the Office of Fair Trading has provisionally found that large supermarkets and dairy processors have colluded to increase the prices of dairy products, which led to an estimated cost to consumers of around 270 million pounds, reported the press-centre of FAS Russia.

The OFT has issued a statement of objections, setting out its provisional findings, to Asda, Morrisons, Safeway, Sainsbury and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.

The provisional finding is that these supermarkets and dairy processors engaged in fixing the retail prices for milk, butter and cheese, in breach of the Competition Act, by sharing highly commercially sensitive information, including details of the levels of price increases, over a two year period (2002 and 2003).

The OFT has provisionally found that this practice was harmful to consumers by restricting the competitive process, leading to higher prices. The OFT also believes that the parties understood their actions might be anti-competitive and in fact retailers were previously warned of this by the OFT.

Sean Williams, OFT Executive Director, said: 'This is a very serious case. We believe supermarkets have been colluding to put up the price of dairy products. Consumers have lost out to the tune of hundreds of millions of pounds. This kind of collusion on price is a very serious breach of the law. Businesses should understand that where we find evidence of this kind of anti-competitive activity we will use the powers at our disposal to punish the companies involved and to deter other businesses from taking such actions.'

The OFT will not be in a position to decide if the law has been breached until it has received and reviewed the parties' responses to the statement of objections and any comments from interested third parties.

Reference:
1. The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers anti-competitive agreements and concerted practices, that have the object or effect of preventing, restricting or distorting competition in the UK or a part thereof.

2. A statement of objections gives notice of a proposed infringement decision under the Competition Act 1998 to the parties involved. The parties then have the opportunity to make written and oral representations in response to the case set out by the OFT. Such representations will be considered by the OFT before any final decision is made.

3. The statement of objections will not be published. In accordance with the OFT's guidance on 'Involving third parties in Competition Act investigations', any person who wishes to comment on the OFT's provisional findings, and who is in a position to materially assist the OFT in testing its factual, legal or economic arguments, may request a non-confidential version of the statement of objections by contacting the OFT no later than 11 October 2007.