The OFT has published its provisional findings that Asda, Morrisons, Sainsbury's and Tesco, and dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman shared highly commercially sensitive information on the level of price increases during 2002 and 2003.

This was "harmful to consumers" and restricted the competitive process, leading to higher prices, the OFT said.

A spokesman said:

"This is a very serious case. We believe supermarkets have been colluding to put up the price of dairy products. Consumers have lost out to the tune of hundreds of millions of pounds.

"This kind of collusion on price is a very serious breach of the law. Businesses should understand that where we find evidence of this kind of anti-competitive activity we will use the powers at our disposal to punish the companies involved and to deter other businesses from taking such actions."