Supermarkets admit milk price-fixing

Two leading supermarkets have admitted colluding to increase the price of dairy products.

Sainsbury's and Asda have each admitted to playing a role in a price-fixing group thought to have earned about £270m from consumers. The activity was detailed in the provisional findings of an Office of Fair Trading (OFT) report, released in September.

Along with a number of dairy firms, the two supermarkets have now agreed to pay fines totalling £116m. No deal was reached by the OFT with Tesco and Morrisons, which are alleged to have also had a role in the price-fixing.

In a statement on the Sainsbury's website, chief executive Justin King said: "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."

An Asda spokesperson told BBC News that the supermarket's intention had been "to provide more money for dairy farmers, who were under severe financial pressure at the time".

Meanwhile, the British Retail Consortium (BRC) has refuted the OFT's provisional finding that the increases in retail milk pricing had no effect on the price farmers received. It said that data from the Milk Development Council (MDC) shows that the price paid to farmers rose from 15.3p to 19.1p per litre between June 2002 and December 2003, during the period covered by the OFT's review.

BRC director-general Kevin Hawkins said: "This is clear evidence that the increases in retail milk prices introduced by supermarkets benefited farmers as they were meant to."