License to Cheat: Price Fixing Fines Leave Supermarkets Better Off
Media Statement: “It seems to us the UK Office of Fair Trading (OFT) has given supermarkets and milk processors a green light on price fixing." The OFT today issued a decision following its dairy products retail pricing investigation stating that Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury's, Tesco, The Cheese Company and Wiseman infringed antitrust regulations by co-ordinating increases in the prices, leading consumers to pay an estimated UK£270 million extra for cheese and milk in 2002 and 2003. This co-ordination was achieved by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors.
Statement from Wenonah Hauter, Executive Director, Food & Water Europe
Brussels –“It seems to us the UK Office of Fair Trading (OFT) has given supermarkets and milk processors a green light on price fixing.
The OFT today issued a decision following its dairy products retail pricing investigation stating that Arla, Asda, Dairy Crest, McLelland, Safeway, Sainsbury’s, Tesco, The Cheese Company and Wiseman infringed antitrust regulations by co-ordinating increases in the prices, leading consumers to pay an estimated UK£270 million extra for cheese and milk in 2002 and 2003. This co-ordination was achieved by supermarkets indirectly exchanging retail pricing intentions with each other via the dairy processors.
“The competition authority has fined eight of the nine firms for price fixing (Arla having gained immunity), yet the fines to all companies involved only total UK£49.51 million. The companies’ admission of liability appears to have earned them the right to pocket an extra UK£220 million at consumers’ expense at a time when around three British milk farmers a week go out of business. How much of this money went back to farmers? How big is the OFT bill to taxpayers for this result?The OFT says their decision, ‘sends a strong signal to supermarkets, suppliers and other businesses that [we] will take action and impose significant fines where it uncovers anti-competitive behaviour aimed at increasing the prices paid by consumers.”
“We’d like to hear from the OFT how they think this will work if the guilty keep more cash than they have to pay in fines.
“Make no mistake, dairy farmers across the EU need to be paid more. They are struggling as supermarkets and processors use milk as a loss leader by paying less than the cost of production to hard working farmers. A decent living for dairy farmers will not be achieved, nor consumers’ interest served, by giant companies like Tesco and Wiseman acting in concert to raise retail prices when they know the only penalty is a slap on the wrist nearly a decade later. This is exactly the kind of thing a new Ombudsman should tackle, and soon.”
Food & Water Europe is a program of Food & Water Watch, Inc., a non-profit consumer NGO based in Washington, D.C., working to ensure clean water and safe food in Europe and around the world. We challenge the corporate control and abuse of our food and water resources by empowering people to take action and transforming the public consciousness about what we eat and drink.
Contact: Eve Mitchell, Food & Water Europe, emitchell(at)fwweurope.org, +44 (0)1381 610 740