British competition authorities have reached the preliminary conclusion that dairy cooperatives and supermarkets have engaged in illegal collusion, which has harmed British consumers.

Leading supermarkets and dairy processors were today accused of fixing the prices of milk, butter and cheese.

The Office of Fair Trading said it believed the sharing of highly commercially sensitive information – in 2002 and 2003 – led to an estimated cost to consumers of around £270 million.

The OFT's case is against Asda, Morrisons, Safeway, Sainsbury's and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.

OFT executive director Sean Williams said: „This is a very serious case. We believe supermarkets have been colluding to put up the price of dairy products. Consumers have lost out to the tune of hundreds of millions of pounds.“

The OFT said the alleged practice of sharing information restricted the competitive process in the dairy sector, leading to higher prices.

It said the parties understood that their actions might be anti-competitive and said retailers had previously been warned of this by the OFT.

Mr Williams said: „This kind of collusion on price is a very serious breach of the law.".

„Businesses should understand that where we find evidence of this kind of anti-competitive activity, we will use the powers at our disposal to punish the companies involved and to deter other businesses from taking such actions.“

The OFT said it will not be in a position to decide if the law has been breached until it has received and reviewed the parties’ responses and any comments from third parties.

Morrisons chairman Sir Ken Morrison said it was too early to comment fully, but he believed that his chain had never been involved with any of the actions mentioned by the OFT.

He added that any involvement by Safeway was another matter, as it would have occurred prior to the chain's acquisition by the Bradford-based group.

The firms involved in the inquiry could face heavy fines if the matter is proven.

The Competition Act of 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK.

The Independent – Link to the news.