The shock comments came from OFT chief executive John Fingleton during a question and answer session following his speech to delegates at this week’s Dairy UK conference, held the day before the RABDF Dairy Event at Stoneleigh.
Mr Fingleton stunned many in the audience when he said that, by law, security of supply was not an issue that his organisation could take into account when regulating activities in the grocery sector.
Despite the sighting of a Dutch milk tanker in the south west recently, he said evidence received by the OFT suggested that milk supply would tend to stay within (national) borders or even locally. “If the government wants to protect dairy farming they will have to do it another way.”
Jim McLaren, NFU Scotland vice president said it felt like Mr Fingleton had “washed his hands” of the industry.
“I don’t know if he is very ignorant or just being clever in trying to provoke us into lobbying the government to change the law. Surely security of supply must be of fundamental concern to consumers.”
David Wilkinson, a Dairy Farmers of Britain supplier, said Mr Fingleton’s comments were very worrying.
Ironically, they came after he had tried to reassure the audience that the OFT was not against consolidation in the dairy sector. In the past 10 years, 17 of the 20 deals looked at by the OFT had been approved, he said.
He also offered hope for those who believe that three major British dairy co-ops is too many by stressing that agricultural co-operatives were excluded from the 1998 Competition Act.
But he admitted that the OFT was forced to refer some seemingly innocuous mergers – like Robert Wiseman’s proposed takeover of minnow Scottish Pride last year (check) – to the Competition Commission because it had to rely on submitted evidence and had no investigative powers of its own. Contesting such moves was often prohibitively expensive, he conceded.
It was also wrong that companies were allowed to appeal decisions involving their competitors, he said.
David Curry, Dairy UK chairman, said he was slightly reassured that the OFT’s position had become clearer since Mr Fingleton took over in 2005.
He said he would consider launching a private members bill in parliament to give the OFT investigative powers, which could mean fewer referrals to the Competition Commission.