Tesco seeks legal action after being fined €12 million

British supermarket group Tesco threatens with legal actions against the British Office of Fair Trading, after the Office fined them 10.4 million pounds (11.8 million euro) for price fixing in 2002 and 2003. 

Big Four implied in price fixing scheme

With the fines, the OFT concludes an investigation into a price fixing scheme involving all of the British “Big Four”: Tesco, Sainsbury’s, Wal-Mart’s Asda and Morrisons (via their Safeway daughter). They are found guilty of exchanging their selling prices through IT-systems of dairy producers Arla, Dairy Crest, McLelland, The Cheese Company and Wiseman. The OFT had calculated that British consumers paid up to 310 million euro too much because of this scheme – but did not include that figure in its final report.

All but Tesco receive leniency as total fine drops 57%

Dairy producer Arla Foods received no fine as they were the whistle-blowers on this case, and seven of the eight others received considerably lower fines than originally planned due to lack of evidence and pleading guilty. Only Tesco was stuck with its original fine of almost 12 million euro – still lower than Sainsbury’s ‘lenient’ fine of 12.6 million. Even though only Tesco received its original high fine, OFT chairman John Fingleton says these fines prove that his office takes the battle against price fixing seriously. The total fine for the nine companies is 56 million euro, a long way down from the original 132 million.

Legal action against OFT

Tesco’s reaction was one of fury and denial. The Guardian quoted Lucy Neville-Rolfe, director of corporate & legal affairs at Tesco, saying to be “disheartened and disturbed that the OFT continues to pursue this costly and time-consuming case at the expense of both the taxpayer 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.” Tesco denied having fixed dairy prices and promised to defend its position “vigorously” and “through the courts if necessary”. Should the OFT maintain these fines, Tesco will again call for the Office to be dismantled completely.