The UK’s largest retailer Tesco has called for reforms of competition regulation after being slapped with a £10 million fine by the Office of Fair Trading (OFT) today.
Tesco, along with Asda, Safeway, Sainsbury’s and five dairy processors, has been found guilty of price fixing in regards to cheese products following an OFT investigation conducted between 2002 and 2003.
Over £49 million worth of penalty payments have been imposed on the guilty parties following the judgement, with Asda liable for over £9 million and Sainsbury’s around £11 million, but all parties barring Tesco have had reductions to their fines due to accepting liability and seeking to resolve the issue early.
At no point has Tesco admitted to the charges and its Director of Corporate and Legal Affairs, Lucy Neville-Rolfe, confirmed today that it will continue to contest the OFT’s decision.
Neville-Rolfe stated: “We are disheartened and disturbed that the OFT continues to pursue this costly and time consuming case at the expense of both the tax payer 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. We will continue to defend our position vigorously, through the courts if necessary.”
The OFT found that three infringements of the Competition Act 1998 were committed over the two-year period, where supermarkets and suppliers colluded to increase prices on cheese and fresh liquid cheese.
Supermarkets exchanged information with one another via so called A-B-C information exchanges; where they indirectly communicated retail pricing intentions via their dairy processors.
John Fingleton, CEO of the OFT, claimed that the ruling delivered a clear message to supermarkets and suppliers that competition laws will be enforced but Tesco suggested that the length and problematic nature of the investigation show that changes are needed in how legislation is enacted.
“We surely have now reached the stage where the absurdity of the OFT operating as investigator, prosecutor and judge cannot be allowed to continue,” Neville-Rolfe added.
“The government’s plans for the new competition regime must address this anomaly, in the interests of the consumer and the business community.”