| 10.3°C Belfast

Tesco may fight £10m fine for price-fixing in the courts

Supermarket giant Tesco has threatened legal action against the competition watchdog after it was slapped with a £10m 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 £50m.

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

The supermarket was 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 £270m. The OFT had initially intended to fine the guilty parties more that £116m, 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.

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 the taxpayer and UK business.”

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.

Yesterday’s final decision by the OFT sees Tesco, Sainsbury's and Asda all fined around £10m each for their role in the scandal.

Dairy processors involved were given penalties ranging from £1.26m to £7.14m.

But the watchdog has come under attack for the length and cost of the investigation.

Belfast Telegraph