Farmers have branded as “too little, too late” a decision to fine supermarkets and processors over price fixing.

The Office of Fair Trading (OFT) yesterday (tue) announced fines of nearly £50 million for co-ordinating increases in prices consumers paid for certain products in 2002 and/or 2003.

One supermarket, Tesco, reacted angrily to the news and has threatened legal action against the competition watchdog after it was ordered to fork out nearly £10 million.

But David Horton, a dairy farmer and National Farmers Union representative, said farmers had already paid the price of the scandal.

“Dairy farmers have already suffered. This investigation is too little too late,” he said. “Tesco has been fined nearly £10 million, but that’s a drop in the ocean to a big company like that.”

According to the OFT investigation, the co-ordination between four supermarkets and five dairy processors is thought to have cost consumers around £270 million.

The price rigging was achieved in cheese and milk in 2002 and 2003 by supermarkets indirectly exchanging retail pricing intentions with each other via the processors.

While not wanting to be drawn on the legal side of the argument relating to Tesco, Mr Horton said dairy farmers were still badly affected.

“We can grow grass and turn it into milk efficiently, yet we are losing producers hand over fist,” he said. “In 1998 we had 28,000 producers, now we have 11,000. The number of dairy cows has gone down from 2.2 million to 1.8million. It is ridiculous.”

Mr Horton said the OFT investigation has taken too long and called for the establishment of a grocery adjudicator to be speeded up.

NFU South West dairy adviser Andrew Butler said the period in question was a low point, but farmers were still being asked to produce in a financially unsustainable way.

“The period covered by the OFT’s investigation – 2002/2003 – was an extremely difficult time for dairy farmers when prices were very low,” said Mr Butler.

“In subsequent years we have seen the development of dedicated retail supply chains for liquid milk which have provided better returns for some dairy farmers.

“But the majority of dairy farming businesses are still financially unsustainable, either operating very close to or even below the costs of production, which threatens the long term supply of domestically produced milk and dairy products for consumers.

“The NFU is lobbying hard for fairer contracts and more balanced negotiations between farmers and their processors so they can get a decent return on their milk, have the confidence to invest in their businesses, and secure the long term supply of British milk and British cheese for retailers and consumers.”

John Fingleton, OFT chief executive, said the decision to issue the fine sent a “strong signal” that it would take action where it uncovered anti-competitive behaviour designed to push up prices.

Tesco refuted the OFT findings, reacting with “surprise and dismay” and promised to defend its position “vigorously” and “through the courts if necessary”.

The OFT had initially intended to fine the guilty parties £116 million, but scaled back the penalties after a period of consultation.

Asda, Sainsbury’s and Safeway and dairy processors Arla, Dairy Crest, McLelland, The Cheese Company and Wiseman all received lenient fines after admitting liability.

Tesco however stands alone in denying that it colluded with the others to inflate the price of milk and cheese.