Glasgow cheesemaker A McLelland yesterday admitted it was part of a £270m price-fixing ring in the years before it was acquired by French dairy giant Lactalis in 2004 - but the company is expected to be shown mercy because it co-operated with the authorities.

The Office of Fair Trading said yesterday that the maker of Seriously Strong cheddar had admitted involvement in alleged anti-competitive practices in the retail price of cheese.

Supermarkets Asda, Sainsbury's and Safeway, prior to its takeover by Morrisons, as well as a number of dairies, have already admitted price-fixing during 2002 and 2003.

After owning up and agreeing to co-operate with the investigation, the OFT said Lactalis McLelland would receive a "significant reduction in the financial penalty that could otherwise have been imposed".

Asked by The Herald yesterday to explain precisely how it had co-operated with the authorities, a spokeswoman for the company said: "Because we're not a listed company, we have taken the decision not to comment."

However, in a prepared statement, the company said: "We can confirm that we have signed an early resolution agreement with the OFT in relation to that competition authority's investigation into dairy retail prices in 2002 and 2003, prior to Lactalis's acquisition of McLelland.

"The Lactalis Group had no knowledge of these exchanges either at the time of the acquisition or during purchase negotiations."

It added: "As part of the agreement, the company will pay a considerably reduced fine in exchange for its ongoing co-operation in the OFT investigation, and we are glad to draw this matter to a close."

Lactalis, which is based in Laval, France is one of the world's leading cheese manufacturers, with sales of more than 600,000 tonnes in more than 140 countries, including the US, Russia, Poland, Italy and Spain. The company, owned by the Besnier family, employs 20,000 workers. It is famous for its President brand and is a major producer of Gorgonzola in Italy.

Prior to its sale, A McLelland was one of Scotland's oldest companies, founded in 1840. Its "Seriously Strong Cheddar" has become one of Scotland's most popular brands.

The company achieved infamy three years ago when several of its advertisements were banned by Hello! magazine. Under the slogan, "Safe Sex, Dangerous Cheese", the adverts consisted of a series of stylish but risqué images representing various sensations.

Alastair and Douglas Irvine, former joint managing directors of McLelland and the fifth generation of the family to head the business, along with their father Hugh Irvine, the former chairman, were all equal partners in the company and are understood to have sliced up the £170m-plus sale price to take home at least £56m each.

Meanwhile, retailers Tesco and Morrisons are still fighting the OFT claims and it was reported earlier this week that Morrisons was taking legal action against the watchdog over its naming in the investigation.