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PRICES 2
Tesco has threatened legal action after being hit with a
£10m fine from the Office of Fair Trading (OFT)
following an inquiry into the price fixing of dairy
products. The supermarket was one of nine firms facing
penalties totalling close to £50m for colluding over the
price of milk and cheese in 2002 and 2003. Tesco
expressed "surprise and dismay" that it was
included in the penalties handed down by the regulator
and denies it colluded with others. The OFT estimated
that the collusion saw shoppers pay 2 pence extra for a
litre of milk and 2p extra on 100g of cheese.
The regulator originally calculated that an extra £270m
was spent by UK consumers as a result of the price
fixing, but no total figure has been included in the
final report. The OFT found that Arla, Asda, Dairy Crest,
McLelland, Safeway, Sainsbury's, The Cheese Company,
Wiseman, and Tesco infringed the Competition Act by
co-ordinating rises in the prices consumers paid for
certain dairy products in 2002 and, or 2003.
Lucy Neville-Rolfe, Tesco's director of corporate and
legal affairs, said, "We surely have now reached the
stage where the absurdity of the OFT operating as
investigator, prosecutor and judge cannot be allowed to
continue." The OFT said that supermarkets had
indirectly exchanged pricing details with each other via
the dairy processors. However, it said that not all the
companies were involved in all the infringements that it
had found.
The final penalties announced by the OFT were £9.39m for
Asda, £7.14m for Dairy Crest, £1.66m for McLelland,
£5.69m for Safeway, £11.04m for Sainsbury's, £1.26m
for The Cheese Company, £3.2m for Wiseman and £10.43m
for Tesco. Although Arla was found to been involved in
the infringement regarding milk in 2003, it has not been
fined as it alerted the OFT to price fixing and was given
immunity.
OFT chief executive John Fingleton said,
"Competition in the supermarket sector is generally
intense and has delivered significant benefits to
shoppers across the UK in terms of innovation, choice and
improved value for money. Our investigation and this
final decision will help ensure that this competition is
maintained." (Source: BBC News, Aug/11)
Households will spend on average an extra
£350 on essential bills in the next 12 months. Families
struggling with rising inflation and pay freezes face
rises in the cost of 'must pay' items such as water,
phone calls, stamps, council tax and the BBC licence fee.
And motorists could be worst hit if the Government pushes
ahead with its decision to raise the tax on a litre of
petrol by 3p from April 1. It would mean a family with
two petrol cars will have to pay an extra £201.60 a year
in fuel tax, according to the AA. The rise is also likely
to push up the price of groceries because of the increase
in business transport costs.
Edmund King, president of the AA, said, "If price
increases turn out as badly as we fear, they will become
an important issue in the coming election." The
Government is also increasing road tax for 21million
vehicles, with tax on Band H vehicles going up by £65 to
£240 per year. The average council tax bill is set to
rise by an average of 1.6%, taking the typical bill up
36p a week to £18.72. A postcode lottery for water
suppliers means that some homes will see their annual
bill fall by up to £16, while others, such as those
served by Northumbrian Water, will pay £11 more this
year, taking the annual figure to £311.
BT is shifting its off-peak period on weekdays from
between 6pm and 6am to between 7pm and 7am. This means
customers on its Evening and Weekend plan who make one
call of less than a minute between 6pm and 7pm every day
will either have to pay an extra £57.67 a year, or pay
£24 more a year to join BT's Anytime Plan. April 1 also
sees the cost of a BBC colour TV licence fee rise by £3
to £145.50. The Royal Mail is putting up the price of a
first class stamp by 2p to 41p, after a rise of 3p last
year. Second class goes up 2p to 32p. The increases take
effect from April 6.
Anyone buying a new car from April 1 faces a paying a
'showroom tax'. For the first year this will replace the
road tax, and can be up to £950 for gas-guzzling
vehicles, and £250 for Band H cars. Inflation hit 3.5%
in January, almost double the November figure, according
to the Office for National Statistics. This was fuelled
by the return of VAT to 17.5% in that month. Savers are
seeing their nest eggs shrink because bank interest rates
are too small to counter inflation. Meanwhile private
sector workers have seen their average wages fall 0.1% in
the last year.
Finance expert Rebecca Atkinson, editor of
Moneywise.co.uk, said, "'The expected fuel duty
increase is coming on top of petrol prices which have
gone up by quite a lot already. An increase of 3p a
weekend is quite a big burden on people, and will filter
through to food prices because retailers will have to pay
more for petrol too. By changing the time for off-peak
phone calls, BT will make people either go for a higher
tariff, or mean people using the phone between 6pm and
7pm will have to pay more." (Source: Daily Mail, Mar/10)
The story gets worse. The Japanese drive on
the left, as we do. So it should be easy for dealers
there to export their cheap cars here. But even such
'grey' imports have been kept out. It has been made
virtually impossible for a Japanese dealer to sell to,
say, Asda or Tesco. A limit of 100 cars every five years
has been imposed on importers. To its credit, the
Government has realised that this is a restriction on
trade and announced this weekend that it intends to end
it. So we might at last see Japanese or Korean cars at
British supermarkets.
The Government was not so helpful with regard to prices
in the Budget. The extra excise duties on petrol and
diesel mean that delivery of every object we buy in the
shops will cost us more. This comes after several years
of tax increases on fuel that have made British petrol,
the cheapest in Western Europe in 1993, now the most
expensive. This in a country that is a net exporter of
oil. Our oil importing neighbours, on the other hand,
have seen fuel prices fluctuate with the market.
Meanwhile, the VAT duty that we pay on most goods is much
higher than the sales tax payable in most American
states. In that direct way, too, it is government that
makes our prices higher.
But the most important impact of government on prices has
been through creating or sanctioning barriers to
competition. In virtually every business where British
prices are high, government has allowed an obstacle.
Perhaps the most celebrated barrier is the Common
Agricultural Policy which has cost British families as
much as £1,000 a year in higher prices and taxes. Such
barriers have been created by - or are supported by -
governments (or the EU). Of course there are specific
businesses that may gain from such barriers and lobby for
them. All businesses love a monopoly. But governments
cannot duck responsibility. If one is "angry"
about high prices in Britain, one should be angry at
governments - past and present.
British shoppers pay up to 40% more for branded items
such as clothes and perfumes than consumers in other
countries, according to a government report. The study,
carried out jointly with the Swedish Government, has
prompted Trade and Industry Secretary Stephen Byres to
call for reforms to stop UK shoppers being ripped off.
Under European Union (EU) trademark laws, manufacturers
can dictate which retailers in the EU can sell their
products and where they can import them from.
Mr Byers said companies were obviously abusing the
legislation to keep prices artificially high in some
countries. The legislation also prevents British
retailers from sourcing goods from outside the EU on the
"grey market" where they are often cheaper. He
is now calling for an overhaul of the trademark laws.
"Action is needed to reform the EU law on the
protection of branded goods," he said. "I want
the Tesco's and Asda's of this world to be able to source
the best deals from anywhere in the world and pass those
savings on to consumers." He said the findings had
been circulated to other European Union member states.
The report surveyed the price of 133 items in France,
Germany, Sweden, the UK and the US. It found that High
Street prices in Britain were often the most expensive.
In particular, music lovers are often paying
significantly more for chart CDs, DVDs and computer game
consoles. The findings will be discussed at a meeting of
European consumer affairs ministers in Sweden on Thursday
and Friday. Consumer Minister Kim Howells will be
representing the UK. Court cases Mr Howells said:
"We are working with the Swedes to push for removal
of trademark restrictions on the import of such goods.
"We hope other member states will support our joint
approach. More cut-price designer goods could be sold on
supermarket shelves "We want the European Commission
to change the Trade Mark Directive so traders can import
cheaper branded goods from any country. "Allowing
brands to dictate which retailers can sell their products
and where they can import them from is unacceptable.
"Effectively the directive forces retailers to
import goods from the most expensive suppliers."
Supermarkets, most notably Tesco, have gone head-to-head
with companies and sourced goods from outside the EU on
the "grey market". Clothes manufacturer Levi
Strauss has argued this is illegal. But earlier, the
European Court of Justice indicated that traders such as
Tesco should have their interests considered.
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