Asda is co-operating with the Office of Fair Trading (OFT), as the long-running investigation into the price-fixing of milk, cheese and butter draws to a close, according to a report in The Daily Telegraph.

It is understood that, in return for its co-operation, Asda could receive a significant reduction in any possible fine, which analysts believe could amount to hundreds of millions of pounds.

The OFT announced in September that it believed that Asda, Tesco, Sainsbury's and Safeway had engaged in price-fixing alongside five processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.

OFT executive director Sean Williams said at the time: “This is a very serious case. We believe that supermarkets have been colluding to put up the price of dairy products.” The OFT claimed that the collusion had cost consumers£270 million.

On the same day as the Competition Commission made its provisional findings public, OFT senior director Sonya Branch wrote to the supermarkets and processors involved in the inquiry, warning them that any eventual fine had to have “sufficient deterrent effect”.

In the letter, she pointed out that in recent similar cases the fines had been between 1 per cent and 2 per cent of companies' annual worldwide turnover. British Airways was fined£121.5 million after admitting collusion in fixing the prices of fuel surcharges earlier this year.

However, the OFT added in the letter that the fine could be reduced by between 30 per cent and 35 per cent if an “admission of culpability enabled a speedy resolution of the investigation”.

Both Asda and the OFT refused to comment.

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