Two weeks after the worst food scare since BSE, it appears Premier Foods will not be penalized by the the Food Standards Agency (FSA). However Britain's other FSA might not agree.
The Financial Services Authority has written to Premier demanding an account of events leading up to the processed food giant's warning that hundreds of popular products had possibly been contaminated by a banned carcinogenic dye, Sudan 1, found in some of their products.
Premier's announcement prompted consumers to dump their Pot Noodles and ready meals, but it initiated a panic of share-dumping that swiped almost 3 per cent off the £700 million company's market value.
The City watchdog is concerned that there was an undue delay in disclosing the news to shareholders. Premier publicly announced the problem on 18 February, 11 days after it became aware there was a problem. but had already alerted suppliers and customers, including the big supermarkets, days earlier;
The FSA must ensure no-one with prior knowledge could have used the crisis to advantage by selling Premier's shares at a preliminary stage The regulator has begun examining a surge in share trades in the days leading up to 18 February.
Premier, which was floated successfully by private equity firm Hicks Muse just last year,could be embarrassed by any disclosures of illegality.
Premier might argue its actions in delaying the revelations were scrupulous regarding its obligations to alert health officials and that it tried to avoid needless damage to the food industry in general until the extent of the contamination was established.By giving supermarkets an early warning it enabled them to clear their shelves as quickly as possible.
The FSA's role is to protect shareholders, rather than the food industry's public image, and this controversy might well put it on a collision course with its namesake. If this happens expect even more confusion and muck slinging from both parties.