OFT in new supermarket crackdown

Britain's four biggest supermarkets are under investigation by the Office of Fair Trading (OFT) for fixing prices of health, beauty and grocery products. The OFT also contacted some of their suppliers such as Unilever, Procter & Gamble, Reckitt Benckiser and Mars. News of the latest investigation came days after the OFT announced it was looking into allegations that tobacco firms and 11 retailers, including Asda, Sainsbury's and Tesco, had fixed the price of tobacco products. The banking and housebuilding sectors have also been the targets of the OFT recently. Companies found guilty of price collusion can expect fines under the Competition Act of up to 10% of turnover. Under the 2002 Enterprise Act, cartel-like behaviour may also carry a jail term of up to five years for directors or senior executives involved. The number of recent investigations has fuelled criticism from some business leaders over the watchdog's tactics, which have been described as overly aggressive since the OFT's current chief executive John Fingleton took charge at the end of 2005.

BBC News

OFT accuses tobacco firms and retailers of cigarette price-fixing

The Office of Fair Trading (OFT) has alleged tobacco firms and supermarkets have been engaged in unlawful practices linked to retail prices for tobacco. The OFT names 11 retailers, including Asda, Sainsbury and Tesco, and tobacco firms Imperial Tobacco and Gallaher. One allegation is that retailers and tobacco groups arranged to swap information on future pricing. A separate allegation is that there was an understanding that the price of some brands would be linked to rival brands. The OFT said understandings between cigarette companies and retailers between 2000 and 2003 limited the retailers' ability "to determine its selling price independently". This is not about price fixing," an OFT spokeswoman said "This is about retail price co-ordination, which is also illegal.

http://news.bbc.co.uk/1/hi/business/7366348.stm

http://www.guardian.co.uk/business/2008/apr/25/regulators.retail

BAA 'acting against the interests of passengers and airlines'.

BAA's ownership of seven UK airports "may not be serving well the interests of either airlines or passengers", the Competition Commission has said. The commission's "emerging thinking" report said that BAA, "dominates the airports markets in the south-east of England and in lowland Scotland". The Competition Commission stressed that it had not yet reached any conclusions but added that it would set out its remedies to any competition problems in August, "whether requiring the sale of one or more of BAA's airports or otherwise".

http://news.bbc.co.uk/1/hi/business/7360046.stm

Think about how the monopoly position of BAA could impact on both passengers and the airlines. Are there any advantages to having one operator in control of all the airports? How could more competition be created? Would such competition address the criticsims?

Price fixing in the construction industry

More than a hundred British construction companies are facing the threat of heavy fines after the Office of Fair Trading accused them of rigging bids. In one of the competition watchdog's biggest investigations, the OFT probed thousands of tenders for construction work worth some £3bn covering schools, hospitals and private-sector developments, before focusing on 240 alleged infringements involving 112 companies.

John Fingleton, OFT chief executive, said: "Cartel activity of the type alleged today harms the economy by distorting competition and keeping price artificially high. This investigation ... will hopefully send a strong message to the construction industry about the seriousness with which we view suspected anti-competitive behaviour. Businesses have no excuse for not knowing and abiding by the law."

http://www.guardian.co.uk/business/2008/apr/18/construction.regeneration

http://news.bbc.co.uk/1/hi/business/7351867.stm