On 20 September 2007 the Office of Fair Trading (OFT) announced that it has provisionally decided that certain dairy processors and large supermarkets have colluded to increase the prices of dairy products, in contravention of UK competition law.

The OFT has issued a "statement of objections" to supermarkets and dairy processors which it believes fixed the prices for butter, milk and cheese by sharing highly commercially sensitive information, including details of the levels of price increases, in 2002 and 2003.

The OFT’s finding is only provisional and does not mean that an infringement decision is inevitable. This will depend on whether any responses made by the dairy processors and supermarkets can change the OFT’s views on the parties’ actions.

The dairy sector has been the subject of competition scrutiny over many years. For example, over the last eight years the Competition Commission (CC) has reviewed the supply of fresh processed milk to certain customers in Scotland, the supply of raw milk in Great Britain and a dairy sector merger. The OFT’s activities in the dairy sector include consideration of numerous dairy sector mergers as well as allegations of price fixing and abuse of dominance in the supply of fresh processed milk to certain customers in Scotland.

The OFT and the CC are sure to have built up an in-depth knowledge of the dairy sector as a result of these investigations, together with the CC’s on-going work in the supermarkets sector. The OFT’s latest step has been given a high profile and is described by the OFT as "a very serious case".

The case is another reminder of the importance of understanding and complying with the competition rules. For more information on competition law compliance, see our Competition Survivial Pack or contact us.

Please click here for the OFT’s press release on its provisional findings.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 20/09/2007.