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Tesco defiant over price-fix fine

Supermarket giant Tesco has threatened legal action against the competition watchdog after it was slapped with a £10 million fine for its role in a dairy price-fixing scandal.

The company said it reacted with "surprise and dismay" over the decision by the Office of Fair Trading (OFT) to include it in penalties totalling nearly £50 million.

In a statement, Tesco promised to defend its position "vigorously" and "through the courts if necessary".

The supermarket is among nine firms that the watchdog judged to have colluded to rig the price of cheese and milk in 2002 and 2003.

The scandal is thought to have cost consumers around £270 million. The OFT had initially intended to fine the guilty parties more than £116 million but scaled back the penalties after a period of consultation.

Supermarket chains Asda, Sainsbury's and Safeway and dairy processors Arla, Dairy Crest, McLelland, The Cheese Company and Wiseman all received lenient fines after admitting liability. Tesco stands alone in denying that it colluded with the others to inflate the price of milk and cheese.

Reacting to the decision, Lucy Neville-Rolfe, Tesco's director of corporate and legal affairs, said: "We are disheartened and disturbed that the OFT continues to pursue this costly and time-consuming case at the expense of both the taxpayer and UK business. We have always said we did not collude on prices on cheese and we stand firm in our rebuttal of these ongoing allegations."

Tesco is the second supermarket to threaten legal action over the case. In 2008, Morrisons announced it was to lodge a libel suit against the OFT, alleging that the body had damaged its reputation by including it in a list of guilty firms. The watchdog later dropped its allegation against the supermarket.

The OFT began investigating price-fixing after being alerted to the practice by Arla, which was subsequently given complete immunity from any fines.

It found that between 2002 and 2003, supermarkets and dairies exchanged information regarding pricing intentions to co-ordinate increases felt by the consumer. As a result, shoppers were made to pay more for cheese and milk products than they should have been, the watchdog found.

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