Dairy group Lactalis McLelland will face a reduced financial penalty from the Office of Fair Trading (OFT) after accepting responsibility for its role in the alleged price fixing of cheeses in the UK.
The company, which was formed in 2004 following the acquisition of A McLelland and Son by Groupe Lactalis, has entered into an early resolution agreement with the OFT over the alleged anti-competitive practices of the former entity in 2003. The agreement relates to a statement of objections released by the OFT back in September last year, which claimed to have found provisional evidence of price fixing by a number of processors and retailers operating in the UK. The fine, which is the eighth to be handed out in the current OFT investigation, will result in the combined financials penalties for groups alleged to have involvement in the price fixing now totals £120m, the OFT said. The action highlights the increasing pressure on processors to remain competitive with their pricing, without being accused of breaking-competition rules. This focus is becoming increasingly crucial as the international dairy supply chain is further tightened by increasing global demand, leading to sharp rises in ingredient costs. In agreeing to an early resolution, Lactalis McLelland is expected to receive a significant reduction in the level of financial penalty it will face, though the group must continue to fully cooperate with the investigation, according to the OFT. The OFT said that the dairy group accepted that McLelland and Son had played a role in anti-competitive practices relating to the pricing of cheese in 2002 and 2003 before it was purchased, and would pay a financial penalty as a result.
While retailers Tesco and Morrisons continue to contest the OFT allegations - a battle possibly headed to the courts - the OFT has now settled early resolution with a number of leading groups. These companies Asda, Dairy Crest, and Robert Wiseman Dairies.