Watchdog wallops Woolies with a fine

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The fine is the second largest imposed on a company for breaching listing rules and follows two and half years of argument between the City watchdog and the High Street stores chain.

Woolworths still does not accept the FSA's full findings but said appealing the fine would cost too much and take up too much of management's time.

The case stemmed from a contract between Woolworths' offshoot Entertainment UK to supply wholesale DVDs and CDs to Tesco. This was altered, giving Tesco an extra £8 million of "retrospective discounts" on 20 December, 2005. That effectively took the same amount of Woolworths' profits which had, until then, been expected to be £68 million.

But Woolworths chose not to disclose the changed contract until it gave its usual Chistmas trading update on 18 January,

2006. On that day the group's shares fell by more than 12%.