The UK competition watchdog has defended its move to fine three of the country's largest retailers and three dairy firms for price-fixing.

Sections of the dairy and retail sectors have criticised the Office of Fair Trading's decision to impose fines of up to GBP116m (US$235.2m) on companies including Sainsbury, Asda and Dairy Crest.

The OFT announced the fines after the three companies, alongside supermarket chain Safeway and dairy firms The Cheese Company and Robert Wiseman Dairies, admitted fixing the price of milk, butter and cheese during 2002 and 2003.

The OFT has claimed the collusion cost UK consumers some GBP270m.

Sainsbury's, Asda, Dairy Crest and Robert Wiseman claimed they had increased prices to help cash-strapped farmers.

Richard Clothier, MD of cheese maker Wyke Farms, which was not part of the OFT investigation, backed those companies and said the watchdog had "got it wrong".

"At that time, without substantial price rises, this country was at risk of being in a situation where dairy commodities become rationed due to short supply," Clothier said.

"The OFT's job is to act in the interests of the consumer and a shortage of food, particularly staple items such as dairy is certainly in the interests of no one. The 'fair trade' approach has to apply to home supplied goods and this has clearly not happened here."

However, the OFT insisted that "consumers were misled" and the increase in dairy prices did not reach farmers.

"Dairy farmers did not benefit from this action - our evidence shows that," an OFT spokesperson told just-food this afternoon (7 December).

"We are not against their intentions but we are against collusion and they all raised prices at exactly the same time on exactly the same day. It's a criminal offence and what they have done is wrong."

The British Retail Consortium claimed that there is "clear evidence" that the price increases did reach UK farmers.

The BRC pointed to data from the Milk Development Council, which they claimed shows that between June 2002 and December 2003 the average farm-gate price rose from 15.3 pence per litre to 19.1p per litre.

BRC director general Kevin Hawkins said: "This is clear evidence that the increases in retail milk prices introduced by supermarkets benefited farmers as they were meant to.

"If the OFT are claiming supermarket price rises did not reach farmers they have not looked at the figures."

The OFT's investigation, which was first announced in September, will continue against Morrisons, Tesco and dairy firm Lactalis McLelland after no deals were struck.

The OFT said dairy giant Arla Foods will receive "complete immunity from financial penalty" if it continues to co-operate with the watchdog.

The OFT spokesman declined to comment on the prospects for the retailers and dairy firms still under investigation, except to say that the probe was "ongoing".