Morrisons forces OFT to eat humble pie

The Office of Fair Trading is paying out the hefty sum to settle a defamation case brought against it by Morrisons, after it was falsely named as one of the guilty parties in a price-fixing investigation. It has also agreed to cover the retailer’s costs, and issued an abject apology, saying that it: ‘regrets… these serious errors, and wishes to apologise sincerely to Morrisons for their publication’.

The accusations were made last year following an OFT investigation into collusion between supermarkets and dairies to fix the retail prices of milk, cheese and butter between 2001 and 2003. Morrisons was named alongside several other companies, eight of whom have since admitted to being guilty of the charges to mitigate their fines. Unfortunately for the OFT, however, Morrisons wasn’t one of them – in fact, it turned out that the charges actually related to Safeway, which Morrisons didn’t even own until 2004. Whoops.

To make matters worse, the OFT also went on to claim that Morrisons had already been warned about anti-competitive behaviour – but actually that wasn’t true either. The only allegation against the company had been in connection with milk sales several years earlier, a case that is still ongoing. Whoops again.

It all adds up to a heinously embarrassing episode for the OFT, which has already been criticised for its handling of the case by a senior High Court judge. Mr Justice Davis accused the department of ‘engaging in public relations exercises designed or calculated to attract potentially sensationalist publicity via the media,’ after OFT executive director Sean Williams suggested ‘consumers have lost out to the tune of hundreds of millions of pounds,’ in a release of preliminary findings.

And Justice Davis is not the only one getting hacked off with the OFT. Since John Fingleton took over as CEO in 2006, critics have accused it of being more interested in seeking headlines than promoting fair trade. This supermarket enquiry certainly hasn’t made it any friends: as well as Morrisons’ protests, Tesco is also fighting the charges, and even those who’ve pleaded guilty are apparently hopping mad. They’re claiming that all they did was agree to pay more to dairy farmers – not cheat customers.

Just to really rub it in, Morrisons is being very magnanimous about its crushing victory, revealing that it will donate the £100,000 to charity (Help the Aged and Childline). And since the fine will ultimately paid by the Treasury, and hence the taxpayer, that means we’ve all just donated about 0.2p to a good cause. Give yourself a pat on the back.

This article was first published on managementtoday.co.uk

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