UPDATE 3-UK fines dairies, supermarkets for price fixing

(Adds detail, Morrison, analyst comment, background)

By Marc Jones

LONDON, Dec 7 (Reuters) - Britain's consumer watchdog is imposing fines of up to 116 million pounds ($235 million) after a string of dairy and supermarket groups owned up to fixing milk, butter and cheese prices.

In September, the Office of Fair Trading (OFT) said it had found evidence that the supermarkets and their suppliers had colluded to hike dairy product prices between 2002 and 2003, costing Britain's consumers around 270 million pounds.

In a statement on Friday, the OFT said grocery giants J Sainsbury (SBRY.L: Quote, Profile, Research, Stock Buzz) and Asda (WMT.N: Quote, Profile, Research, Stock Buzz) and a number of dairy firms had admitted raising prices, while it was continuing to pursue Britain's biggest supermarket group, Tesco, smaller rival WM Morrison and dairy firm Lactalis McLelland.

Tesco (TSCO.L: Quote, Profile, Research, Stock Buzz) and Morrisons (MRW.L: Quote, Profile, Research, Stock Buzz) said they would fight the charges.

"We acted independently and we did not collude with anyone," said Tesco in a statement. "Our position is different from our competitors and we are defending our own case vigorously."

Morrisons said: "We continue to make strong representations to the OFT in defence of the allegation."

The OFT said it had reduced fines for Asda, Safeway -- in relation to conduct prior to its acquisition by Morrisons -- and J Sainsbury, as well as dairy companies Dairy Crest (DCG.L: Quote, Profile, Research, Stock Buzz), Robert Wiseman (RWD.L: Quote, Profile, Research, Stock Buzz) and The Cheese Company, because of their cooperation.