Woolworths fined for late release of price sensitive information

Woolworths, the highstreet general goods store, has been fined £350,000 after the FSA found that it should have notified the market earlier of a discount offered on home entertainment products, which one of its subsidiaries supplied to Tesco, the supermarket chain. The deed of variation in the terms of the contract between Entertainment UK (EUK) and Tesco was signed on 20 December 2005 but only announced in the Christmas trading update on 18 January 2006. The change increased a retrospective price reduction for 12 months from 1 March 2006; it was worth an estimated £8m, equivalent to a decline in Woolworths’ expected profits for the financial year 2006/7 of more than 10%. The regulator says that the size of the profit fall in comparison to the £68m expected group income figure meant that the variation was inside information, which should have been published when it was signed on 20 December 2005 under Disclosure Rule 2.2.1. The delay in notification resulted, it holds, in a false market in the company’s shares until 18 January 2006 in breach of Listing Principle 4.