Stores admit dairy price-fixing

The retail giants and a number of major diaries have agreed to pay combined fines of more than £116 million after admitting fixing the price of milk, cheese and butter following a probe by the Office of Fair Trading.

But the UK's biggest supermarket Tesco, which was also found provisionally guilty by the OFT in September, said it would continue to defend itself "vigorously".

Morrisons and dairy group Lactalis McLelland have also not admitted involvement in the claims relating to price fixing during 2002 and 2003.

Sainsbury's said it had agreed to pay the consumer watchdog a settlement of £26 million, but denied it was seeking to rip-off consumers. The group claimed its actions were designed to help dairy farmers at a time when they were under financial strain, following the devastating foot-and-mouth outbreak in 2001.

Justin King, Sainsbury's chief executive, said: "We are disappointed that we have been penalised for actions that were intended to help British farmers, but recognise the benefit of a speedy settlement.

"The price initiatives in 2002 and 2003, which were widely and publicly reported at the time, were designed to help British dairy farmers at a time of considerable economic pressure and public debate about whether farmers were getting a fair price for their products."

Fellow supermarket Safeway, prior to its takeover by Morrisons, and dairies Robert Wiseman, Dairy Crest and The Cheese Company also admitted colluding over dairy prices.

Dairy Crest is expected to pay a fine of £9.4 million after its price-fixing admission, while fellow dairy Robert Wiseman agreed to pay £6.1 million, with all fines going to the Treasury.

The settlements are yet to be finalised, but the OFT said those that have made admissions will receive "a significant reduction in the financial penalty that would otherwise have been imposed". It added it had taken into account the pressures supermarkets were under to support dairy farmers at the time of the price fixing.