Morrisons has secured an out-of-court settlement from the Office of Fair Trading after the competition watchdog admitted it made false accusations against the retailer in last year’s dairy price-fixing inquiry.

In an embarrassing apology issued this morning (23 April), the OFT said it would pay Morrisons some GBP100,000 (US$199,000) to settle a defamation case brought by the supermarket chain.

The OFT said it had been wrong to claim that Morrisons had colluded to push up the price of butter and cheese in 2002 and 2003.

It also apologised for claiming that the retailer had already been warned about anti-competitive behaviour, which it now said was not true.

Morrisons, however, is still facing an investigation over the supply of liquid milk products in 2002. The OFT said it was still considering evidence from Morrisons and had an “open mind” about the case.

The OFT launched its inquiry into dairy price-fixing last September and then claimed that UK dairy producers and retailers had cost consumers some GBP270m over a two-year period.

In December, three retailers – Sainsbury’s, Asda and Safeway – and three producers – Dairy Crest , Robert Wiseman Dairies and The Cheese Company – admitted fixing the price of milk, butter and cheese in return for lower fines.

Danish dairy giant Arla Foods, meanwhile, admitted its role in return for immunity from fines. 

In February, cheese maker Lactalis McLelland also admitted that subsidiary A McLelland and Son had fixed cheese prices.

Sections of the dairy industry, however, hit out at the fines, arguing that prices were increased to secure supplies from farmers.

Tesco , meanwhile, is still fighting claims against the company.