Dairy Crest Regulatory News (DCG)

7 Dec 2007 07:19

Office of Fair Trading07 December 2007 170/07 7 December 2007 OFT WELCOMES EARLY RESOLUTION AGREEMENTS AND AGREES OVER £116M PENALTIES INVESTIGATIONS CONTINUE AGAINST OTHER SUPERMARKETS AND A DAIRY PROCESSOR Following the OFT's Statement of Objections (SO) of 20 September 2007 whichprovisionally found evidence of collusion between certain large supermarkets(Asda, Morrisons, Safeway, Sainsbury's and Tesco) and dairy processors (Arla,Dairy Crest, Lactalis McLelland, The Cheese Company (formerly Glanbia FoodsLimited) and Wiseman) on the retail prices of some dairy products, certain ofthese parties have now admitted involvement in anti-competitive practices andhave agreed to pay individual penalties which, combined, come to a maximum ofover £116 million. With a view to maintaining strong and effective competition law, the OFT willcontinue with its case against the remaining parties. The SO set out the OFT's provisional findings that certain large supermarketsand dairy processors have colluded to increase the retail prices of one or moreof liquid milk, value butter and UK produced cheese. The OFT's provisionalfindings were that the collusion took place through the sharing of commerciallysensitive information in 2002 and, in some cases, in 2003. Details on the scopeof the OFT's infringement allegations are set out below. The OFT has now concluded early resolution agreements with Asda, Dairy Crest,Safeway (in relation to conduct prior to its acquisition by Morrisons),Sainsbury's, The Cheese Company and Wiseman based upon the provisional findingsmade in the SO. These parties have all admitted involvement in certain of theanti-competitive practices identified by the OFT in the SO and have undertakento co-operate fully with the OFT in its investigation, including providingfurther evidence as far as reasonably possible. These parties have accepted a liability in principle, and will pay penaltieswhich amount to a maximum of over £116 million. However each party will receivea significant reduction in the financial penalty that would otherwise have beenimposed on it, on condition that it continues to provide full co-operation.The OFT has also taken into account information provided by the parties involvedin the early resolution discussions which demonstrated the pressures they wereunder at this time to support dairy farmers. The OFT is very pleased that the early and constructive cooperation of Asda,Dairy Crest, Safeway, Sainsbury's, The Cheese Company and Wiseman, has enabledsome of this case to be resolved effectively and swiftly, which willsignificantly reduce the costs of pursuing the investigation to the OFT and tothe businesses concerned. This case demonstrates the flexible approach the OFTis prepared to take to reduce the burden of investigations, while maintainingstrong and effective competition law enforcement. Arla had previously applied to the OFT for leniency and will receive completeimmunity from financial penalty if it continues to fully co-operate.The OFT will continue with its case against Lactalis McLelland, Morrisons andTesco. These parties have an opportunity to make representations on the OFT'sprovisional findings. The OFT will carefully consider any representations, andthe evidence in the case as a whole before reaching any final decision. NOTES TO EDITORS: On 20 September 2007, the OFT issued a Statement of Objections, setting out itsprovisional findings to: Asda, Morrisons, Safeway, Sainsbury and Tesco, as wellas dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Companyand Wiseman. The SO made the following infringement allegations: - Arla is alleged to have facilitated the exchange of commercially sensitiveinformation between certain retailers in respect of the retail price of certainliquid milk products in 2002 and fresh liquid milk 2003. - Dairy Crest is alleged to have facilitated the exchange of commerciallysensitive information between certain retailers in respect of the retail priceof UK produced cheese in 2002 and in respect of fresh liquid milk and valuebutter in 2003. - Wiseman is alleged to have facilitated the exchange of commercially sensitiveinformation between certain retailers in respect of the retail price of freshliquid milk in 2003 only. - The Cheese Company (formerly Glanbia Foods Limited) is alleged to havefacilitated the exchange of commercially sensitive information between certainretailers in respect of the retail price of UK produced cheese in 2002 only. - Lactalis McLelland is alleged to have facilitated the exchange of commerciallysensitive information between certain retailers in respect of the retail priceof UK produced cheese in both 2002 and 2003. - Asda is alleged to have indirectly disclosed to and/or exchanged with certainother retailers commercially sensitive information in respect of the retailprice of certain liquid milk products in 2002, fresh liquid milk in 2003 and UKproduced cheese in both 2002 and 2003. - Morrisons is alleged to have indirectly disclosed to and/or exchanged withcertain other retailers commercially sensitive information in respect of theretail price of certain liquid milk products in 2002 only. - Safeway is alleged to have indirectly disclosed to and/or exchanged withcertain other retailers commercially sensitive information in respect of theretail price of certain liquid milk products in 2002, fresh liquid milk in 2003,UK produced cheese in 2002 and value butter in 2003. The OFT's provisionalfindings in respect of Safeway relate to conduct that occurred prior to itsacquisition by Morrisons. - Sainsbury's is alleged to have indirectly disclosed to and/or exchanged withcertain other retailers commercially sensitive information in respect of theretail price of certain liquid milk products in 2002, fresh liquid milk in 2003and UK produced cheese in both 2002 and 2003. - Tesco is alleged to have indirectly disclosed to and/or exchanged with certainother retailers commercially sensitive information in respect of the retailprice of certain liquid milk products in 2002, fresh liquid milk in 2003, UKproduced cheese in both 2002 and 2003 and value butter in 2003. 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