Tuesday, 29 April 2008

uk: household brands price fixing investigation

Daily telegraph

PG Tips and Coca-Cola among 100 household brands
investigated over price-fixing

By James Hall and Richard Fletcher

8:21am BST 29/04/2008

About 100 leading household brands, including PG Tips, Coca-Cola and Aquafresh, are at the centre of an investigation into allegations of price-fixing, The Daily Telegraph can disclose.
‘Fat’ M&S too slow to go online, says boss They are included on a hit list of grocery products and toiletries drawn up by investigators from the Office of Fair Trading, which runs to five sheets of A4 paper.
Leading supermarkets are accused of colluding with
multinational suppliers over the price of many popular

Andrex toilet paper, Anadin Extra, Cadbury Highlights and Warburtons bread are among the dozens of everyday items.
Several leading supermarkets - including Tesco, Asda, Morrisons and Sainsbury’s - were raided last week by OFT investigators and lawyers amid suspicion that retailers had conspired to fix the price of household products.
Hundreds of emails between them and their suppliers were reportedly seized by the investigators.
Some of the largest multinationals are also involved in the OFT investigation.
The suppliers - including Procter & Gamble, Coca-Cola, GlaxoSmithKline, Unilever and Andrex’s US owner Kimberly-Clark - have been told to supply pricing information to the investigators. Any found guilty could be fined up to 10 per cent of their annual sales, which would be hundreds of millions of pounds.
It could also mean consumers had paid hundreds of millions of pounds more for their shopping than they should have at a time when food price inflation has already increased the average family’s annual shopping bill by almost £800.
Consumer groups fear that supermarkets and their suppliers have taken advantage of the recent boom in global food costs to inflate their prices.
That suggestion will be of particular concern to millions of households struggling not only with rapidly rising grocery bills - but also increased mortgage and energy costs.
Philip Cullum, the acting chief executive of the National Consumer Council, the Government’s consumer watchdog, said: « Consumers spend many millions of pounds on these everyday items and shoppers will be alarmed to see the OFT is investigating the relationship between some of the country’s best known companies.
« The NCC is watching the OFT’s investigation with great interest. »
Suppliers and retailers have been given until June to provide the OFT with the pricing information they have requested.
There are also suggestions that the watchdog seized emails between retailers and suppliers. It is believed that some suppliers on the hit list have yet to be contacted by the OFT.
The disclosure that the pricing of some of Britain’s most popular brands is being examined demonstrates just how wide-ranging the regulator’s new investigation is.
It is also running a separate investigation into price-fixing allegations surrounding dairy products and cigarettes.
John Bridgeman, a former OFT director general, said:
« Supermarkets account for a huge amount of consumer expenditure. It is a £100 billion sector of the economy.
« There is no smoke without fire. The OFT is not going to go big on this unless it has something to go on. »
MySupermarket.co.uk, the comparison website, said supermarkets sell commonly-purchased goods at almost identical prices to each other.
At the same time, prices have risen substantially. Research by The Grocer magazine showed that a trolley-load of 150 items costs £241.50, a £10 increase on last year.
Prices in supermarkets have risen by 5.5 per cent since last April, according to official government data. For example, a 250g packet of mild cheddar cheese has gone up 17 per cent while a 500g packet of dried spaghetti has increased by 51 per cent.
The price of butter has risen by more than 50 per cent.
However, some health and beauty products are cheaper. The Grocer estimates that Fairy Liquid, made by Procter & Gamble, now costs 7 per cent less.
Other brands understood to be on the OFT list include Colgate Total toothpaste and Dove Moisturiser.
Biscuits manufactured by Northern Foods, one of the largest food producers and a major supplier to Marks & Spencer, are also there.
All the supermarkets and food manufacturers involved have vehemently denied any wrongdoing.
Senior retailers have dismissed the OFT’s latest probe as a « fishing expedition » and have reacted angrily to what they see as yet another high-profile OFT probe.
Shares in Tesco, Sainsbury and Morrison fell on news of the OFT investigation.
Its allegations contrast with the findings of the
Competition Commission which will publish the results of its study of the grocery sector tomorrow.

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