BBC.co.uk: Supermarkets 'fixed dairy prices'

hiake · Sep 20, 2007

Supermarkets 'fixed dairy prices'

The UK's big four supermarkets and dairies colluded to keep the price of dairy goods artificially high, the Office of Fair Trading (OFT) has said.

The price-fixing deal led to consumers overpaying for milk, cheese and butter by an estimated £270m, the OFT said.

Asda, Tesco, Morrisons, Sainsbury's and processors including Dairy Crest and Arla were involved, the OFT said. The supermarkets have denied the claims.

If found guilty of price fixing, the firms could face heavy fines.

Last month, British Airways was fined almost £121.5m by the OFT after it admitted collusion in fixing the prices of fuel surcharges.

"This is a very serious case," said OFT executive director Sean Williams. "This kind of collusion on price is a very serious breach of the law."

According to the OFT, stores and processors had already been warned the practice would limit competition and raise prices.

'Deterrent'

Mr Williams added that the watchdog would ensure it used its powers to punish such behaviour and "deter other businesses from taking such actions".

The Competition Act of 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK.

The OFT has written to the big four supermarkets as well as processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company - part of Milk Link - and Wiseman setting out its findings.

It is now awaiting their responses to the claims - covering 2002 and 2003 - and any objections.

Morrisons said it was too early to comment fully, but added the group had never been involved with any of the actions mentioned by the OFT.

It also said that any Safeway involvement was another issue, as it would have come before the chain's acquisition by the group.

Tesco and Asda added they would "vigorously defend" themselves against any claims they had not acted in the best interest of shoppers.

Meanwhile, trade association Dairy UK added that price rises during the period in question reflected the major costs and income problems being experienced by dairy farmers.

'No rip-off'

The British Retail Consortium (BRC) also insisted there had been no attempt to "rip off the public" adding prices had been raised at the time to help ease pressure on farmers hit by low milk prices.

UK MILK PRICES (Prices in pence per litre)
Farmgate Retail
2001 18.47 42.7
2002 15.31 44.3
2003 16.51 46.6
2004 17.27 47.5
2005 17.3 50.9
2006 16.83 55.3
2007 18.08 56.3
Source: MDC Datum
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"What we were trying to do was to ensure that at least we could get the farm gate price up a bit to help preserve the supply line," BRC director general Kevin Hawkins told the BBC.

However, Sean Rickard, a consultant to the dairy industry and former chief economist at the National Farmers' Union, questioned whether farmers had actually seen the benefit of the price increases.

"If one looks back at the data, it does appear that there does seem to have been an increase in retail prices, even an increase in processors' margins, but the dear old dairy farmers really saw no tangible benefit, no lasting benefit from any such move," Mr Rickard added.

The OFT said it was "committed to sorting out the case as soon as possible," and hoped to issue a final decision by late 2008.

Source: Story from BBC NEWS
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Shall we blame the high incidence of osteoporosis in the UK on the supermarkets? -rolleyes

wind2000 · Sep 20, 2007

it took that long for the government to notice?

dreyvii · Sep 23, 2007

hiake said: ↑

Shall we blame the high incidence of osteoporosis in the UK on the supermarkets? -rolleyes
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Despite the high prices, I think dairy products are generally consumed more in the West compared to the East, no? Incidence of osteoporosis is high every where, probably because of the increase in life expectancy

ProjectD · Sep 23, 2007

hmmm yummy milk

BBC.co.uk: Supermarkets 'fixed dairy prices'

hiake Vardøgr of da E.Twin

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dreyvii Well-Known Member

ProjectD VIP yay :]