UK: OFT Drops Allegations in UK Supermarket Dairy Investigation, Discounting Settlement Fines

On 30 April 2010, the Office of Fair Trading ("OFT") announced it was dropping a number of allegations in its dairy cartel investigation. The OFT conceded there was insufficient evidence of antitrust infringement in the information exchanges it had been investigating since 2003. The OFT announcement vindicates the decision by Morrisons to defend against the OFT's investigation rather than enter into an early settlement. This was despite the fact that seven other companies being investigated had entered into early settlement agreements with the OFT between 2007 and 2008. Tesco is the only party still under investigation by the OFT.

In conjunction with dropping certain aspects of its case, the OFT also agreed to (1) discount by 10% any fine imposed on Tesco, in recognition of Tesco notifying that it does not intend to contest the remaining aspects of the investigation, and (2) reduce the individual penalties agreed with parties that already settled, to the extent that the allegations the OFT has dropped applied to them.

This development highlights the OFT's flexibility in settling antitrust cases, but may also lead some companies to think twice before agreeing to settle cases with the OFT.


In September 2007, the OFT issued a Statement of Objections ("SO") to several supermarkets in the UK (Asda, Morrisons, Safeway, Sainsbury, and Tesco) and dairy processors (Arla, Dairy Crest, Lactalis McLelland, The Cheese Company, and Wiseman), alleging that:

  • the retailers had indirectly disclosed or exchanged with other retailers commercially sensitive retail price information for fresh liquid milk and liquid milk products, UK produced cheese, and value butter in 2002 and 2003; and
  • the dairy processors had facilitated exchanges of retail price information among retailers.

Each retailer and dairy processor was accused of varying degrees of involvement in "hub and spoke" information exchanges, with some operators accused of exchanging price information in all the markets under investigation, and others of doing so in just one, such as cheese or liquid milk. The OFT estimated that the information exchanges artificially increased the price of dairy products by £270 million.

Shortly after the SO was issued, the OFT reached early resolution agreements with several parties: Asda, Safeway, Sainsburys, Dairy Crest, The Cheese Company, and Wiseman all admitted involvement in anticompetitive practices and agreed to pay individual penalties exceeding £116 million in total. Early in 2008, Lactalis McLelland also settled. The remaining two parties, Tesco and Morrisons, continued to defend themselves.

During this process, Morrisons sued the OFT for defamation, after an OFT press release incorrectly suggested that Morrisons was subject to a provisional finding of infringement and that it previously had been warned for anticompetitive behaviour by the OFT. The OFT apologised for its comments and settled out of court for £100,000.

Early settlement agreements

From the enforcer's perspective, a settlement process allows for swift resolution of a case, reducing costs and time spent on investigations and removing the legal uncertainty of an appeal. From the perspective of the subject of an investigation, settlement can enable swift resolution and mitigate the level of fines. A settlement also may make it more difficult for third parties to bring follow on actions for damages, as there is no detailed infringement decision to form the liability basis for a private action.

At the EU level, the European Commission adopted a formal Settlement Notice in 2008 (Notice 2008/C 167/01), outlining its principles and procedure for the early settlement of antitrust investigations. To date this EU settlement process has not been used successfully. This may in part be due to the fact that the Commission requires all parties to an investigation to admit liability and to agree to settlement and because the potential reduction in fines as a reward for settlement is capped at 10% (on top of any leniency).

There is no such formal settlement system in the UK. The OFT adopts a flexible, case-by-case approach. A significant difference between the UK and EU settlement procedures is that the OFT may settle a case with some but not all of the companies under investigation. The OFT's more flexible approach has led to "early resolution" agreements in several cases, in addition to this most recent case: the school fees cartel (2006); the BA/Virgin long-haul fuel-surcharges cartel (2007); and the tobacco retail cartel (2008).

Practical implications

The OFT's decision in the dairy investigation is significant for all parties to OFT investigations.

Resisting the pressure to settle, as the majority of the other companies under investigation had settled, and vigorously defending its interests, Morrisons persuaded the OFT to drop elements of its investigation for which there was insufficient evidence. As a result, Morrisons has avoided liability that other parties had conceded at an early stage. And thanks to Morrisons' persistence, some of the parties that entered into early settlement agreements will have the fines they agreed with the OFT reduced.

This development highlights the importance for companies subject to an OFT investigation to (a) properly assess the strength of the OFT's case against them, before submitting to an early settlement agreement, and (b) resist the temptation to be settle only because others have settled. These decisions are complicated by the fact that, where some party to an investigation fights on, despite others having settled, those other companies ultimately may enjoy a reduction in their fines thanks to the efforts of the non-settling defendant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Matt Evans
In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions