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April 30, 2008

UK: OFT under fire for “vendetta” against retailers

The Office of Fair Trading has been accused by UK investment bank Cazanove of pursuing a grudge against retailers in its latest investigation into price fixing in the sector, a charge that has been denied by the OFT.

The Office of Fair Trading has been accused by UK investment bank Cazanove of pursuing a grudge against retailers in its latest investigation into price fixing in the sector, a charge that has been denied by the OFT.

In a note to investors, Cazanove director MikeTattersall wrote that the OFT’s scrutiny of the sector was “beginning to resemble a vendetta”.

“The level of OFT scrutiny into the UK industry is, in our view, beginning to resemble a vendetta – following a bungled investigation into milk pricing which remains the subject of a legal dispute,” Tattersall wrote.

Last week, an investigation was launched into alleged price-fixing in the grocery sector.  The OFT raided the head quarters of UK retailers and suppliers looking for evidence of collusion.

Tattersall rejected these accusations, pointing to the findings of the three Competition Commission investigations of the sector that have taken place in the last ten years, all of which found the market to be competitive.

“Over a long period of time the UK supermarket industry has been characterised by thin margins, low returns, deflation and fluctuating profitability,” Tattersall wrote.

However, while the OFT does not commnet on ongoing investigations, it has rejected claims that it has acted unfairly.

“The OFT does not embark on investigations without having met certain statutory thresholds and having had a rigorous internal review. Rooting out anti-competitive behaviour is not just good for consumers; it is also good for business generally and especially for those businesses that are customers in these markets,” a spokesperson for the regulator told just-food today.

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