Stores accused over dairy price fix

The Office of Fair Trading (OFT) provisionally found the firms guilty of colluding to increase the price of dairy products.

Liberal Democrat environment spokesman Chris Huhne said big supermarkets had been "caught red handed" charging excessively high prices. But Tesco, Asda, Sainsbury's and Morrisons all hotly denied the claims.

The OFT provisionally found the group of supermarkets and dairy processors had breached the Competition Act by fixing the retail prices for milk, butter and cheese.

The firms shared "highly commercially sensitive information" such as details of price increase levels during the period 2002 and 2003, the OFT said. This restricted the competitive process, pushed up prices and was therefore harmful to consumers, the OFT believes.

The firms understood their actions might be anti-competitive and in fact retailers were previously warned of this by the OFT, the watchdog said.

Asda, Morrisons, Tesco, Sainsbury and Safeway - now owned by Morrisons - were named by the OFT, along with dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.

Shadow rural affairs secretary Peter Ainsworth said: "The fact the OFT believes that the supermarkets have a case to answer will come as no surprise to dairy farmers who have been struggling for years to make any money at all."

Mr Huhne said: "Contrary to the claims of the British Retail Consortium, the big supermarkets have been caught red handed charging excessively high prices for dairy products to consumers."

The firms involved in the inquiry could face heavy fines if found in breach of the 1998 Competition Act.