A 600 page dossier from the Office of Fair Trading (OFT) has been sent to the four big supermarket chains, accusing them of price fixing dairy products in collaboration with dairy companies. Asda, Safeway, Sainsbury’s and Tesco all stand accused of breaching the Competition Act by fixing prices for milk, cheese and butter, and thereby restricting the natural competitive process.

The watchdog claims it has evidence of collusion over two years, during which time the supermarkets shared future milk prices with dairy companies Arla, Dairy Crest, the Cheese Company, Wiseman and Lactalis McLelland who, it is alleged, exchanged details and from there fixed a price.

The Natioal Farmers’ Union has declined to comment on the case until the entire report has been scrutinised, and the supermarkets and dairies now have until mid-December to respond to the .

Andrew Groves from the OFT said: ‘Collusion between retailers on prices is an incredibly serious infringement of competition law? We are focusing on disturbing collusion between retailers and dairies but we are at a provisional stage.’

All the supermarkets concerned intend to fight the allegations in their submissions, and a ruling from the OFT is expected to follow next summer.