UPDATED: Tesco has strongly rebuffed the decision made by the Office of Fair Trading that it, along with other supermarkets, price fixed on dairy products.

Along with Tesco, Asda and Sainsbury’s have also been fined by the OFT for price fixing.

The OFT has imposed fines on the grocers, as well as five dairy processors, totalling £49.51m for price fixing in 2002 and 2003. Safeway, now owned by Morrisons, was also fined.

It is understood Tesco’s fine accounted for £10m of the overall fine, which related to three infringements of the Competition Act 1998.

These were: price fixing on cheese in 2002; cheese in 2003; and on fresh liquid milk in 2003.

However, Tesco has rebuffed the OFT’s decision.

Tesco director of corporate and legal affairs Lucy Neville-Rolfe said: “We are disheartened and disturbed that the OFT continues to pursue this costly and time consuming case at the expense of both the tax payer and UK business.

“This is all the more surprising given that the OFT itself said that ‘competition in the supermarket sector is generally intense and has delivered significant benefits to shoppers’.   We have always said we did not collude on prices on cheese and we stand firm in our rebuttal of these ongoing allegations. We will continue to defend our position vigorously, through the courts if necessary.”

The OFT found that the price fixing co-ordination was achieved by supermarkets “indirectly exchanging retail pricing intentions with each other via the dairy processors”.

Asda, Sainsbury’s, and Safeway’s fines were reduced because they agreed to early resolution, said the OFT.

The three grocers, as well as some of the suppliers, admitted liability for the infringements and agreed to a “streamlined procedure enabling parts of the case to be resolved more quickly, thus reducing the costs of the investigation”.

OFT chief executive John Fingleton said:  “This decision sends a strong signal to supermarkets, suppliers and other businesses that the OFT will take action and impose significant fines where it uncovers anti-competitive behaviour aimed at increasing the prices paid by consumers.

“Competition in the supermarket sector is generally intense and has delivered significant benefits to shoppers across the UK in terms of innovation, choice and improved value for money. Our investigation and this final decision will help ensure that this competition is maintained.

“We welcome the co-operation provided by those companies which admitted to the infringements and have given them lower fines to reflect the reduced resources required to complete our investigation.”

Suppliers that were also fined were Arla, Dairy Crest, McLelland, The Cheese Company and Wiseman.