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Tesco largely successful in quashing the Office of Fair Trading’s Dairy Cartel Decision in the Competition Appeal Tribunal

21/12/12

The Competition Appeal Tribunal has allowed in part Tesco's appeal from the OFT's Dairy Cartel Decision.

The OFT's original decision was that the big supermarkets had exchanged information about their retail pricing intentions for milk and cheese in the face of pressure from farmers in 2002 to increase the farmgate price for milk. The allegation was that they did so indirectly, via their dairy suppliers, in a "hub and spoke" cartel.  All of the retailers and suppliers except Tesco admitted that the infringements took place and signed Early Resolution Agreements.  The OFT pursued only allegations about the price of cheese against Tesco, which Tesco denied, and appealed to the Tribunal.  The OFT's case was that on 8 occasions in 2002 and 5 in 2003 there were exchanges of information pursuant to a secret plan to coordinate retail prices for cheese.

The Tribunal rejected the OFT's case that there was any secret plan to coordinate cheese retail prices, all findings relating to 2003, and 5 out of 8 information exchanges in 2002.  On 3 occasions in 2002, it found that one of Tesco's cheese buyers had participated in unlawful exchanges of future retail pricing intentions with Sainsbury's but not pursuant to any plan to coordinate prices.

The Tribunal's judgment is interesting for its comments on the other parties' admissions which "have little or no probative value" (even as evidence of their own involvement in the alleged infringements) and for its criticisms of the OFT's decision not to call any witnesses to support its case. The Tribunal will hear argument on consequential matters, including what (if any) penalty to impose on Tesco, in the New Year.

The judgment is here.

Maya Lester and Daniel Piccinin acted for Tesco, instructed by Freshfields Bruckhaus Deringer.