Tesco to pay £6.5m fine in dairy price fixing settlement



Tesco (Other OTC: TSCDY - news) is to pay a £6.5m fine for its part in a dairy price fixing scandal, after losing a decade-long court battle.

The supermarket giant’s penalty is substantially less than the initial £10m fine imposed, after it won a partial victory against the Office of Fair Trading.

The Competition Appeal Tribunal decided in December to overturn more than half of the findings by the OFT that Tesco colluded with other retailers and suppliers to fix cheese prices.

It said at the end of last year that there was “insufficient evidence” that Tesco (LSE: TSCO.L - news) was involved in a concerted effort to rig cheese prices in 2003.

But the appeal tribunal upheld the OFT’s conclusion that Tesco was guilty of communicating its pricing to rival retailers through a supplier three times in 2002.

The latest hearing brings to a close a long-running OFT probe that has seen supermarkets and dairy processors pay £39m collectively in fines.

Asda and Sainsbury’s were fined in 2007 but Tesco said at the time it would continue to defend itself “vigorously”.

The OFT estimated that the collusion led to shoppers paying 2p more for a litre of milk and 2p more for 100g of cheese, although Tesco has always denied collusion.

It has been a contentious investigation for the consumer watchdog, which was forced to make a £100,000 libel payout to supermarket Morrisons after wrongly accusing the Bradford-based chain of an infringement in relation to milk, cheese and butter in 2002 and 2003.

A Tesco spokesman said the supermarket was “pleased” it has settled with the OFT.

“Tesco will pay a reduced penalty of £6.5m in respect of three infringements of competition law that took place in 2002. The other findings of the OFT against Tesco have been dismissed,” he said.