Browns fury at OFT milk price warning
4 August 2000
Browns fury at OFT milk price warning
By John Burns
A LETTER from the Office of Fair Trading, warning Safeway that it could face fines if it agreed with other retailers to pass milk price increases to farmers, has been greeted with "disbelief and disgust" by farm minister, Nick Brown.
Farmers For Action members showed the letter to Mr Brown during a closed meeting at MAFF headquarters.
FFA chairman Dave Handley said: "Safeway allowed us to show this letter to Mr Brown. He told us it was an embarrassment to him that he did not know it had been sent and said he had been urging supermarkets and processors to get the milk price to farmers up to keep them in business."
Mr Brown said that he would hold a further meeting with FFA members and ask for a Department of Trade and Industry representative to be present.
The OFT had received a copy of the letter Safeway wrote to FFA confirming that it would be willing to increase retail prices and pass the increase straight back to farmers, provided other retailers did the same. In its letter to Safeway, the OFT said it accepted that farming was having an exceptionally hard time, but that the proposed price increase arrangement might breach the Competition Act 1998 which prohibited "agreements" or "concerted actions".
Considerable fines
"Whatever one might think about the desirability of helping a hard-pressed sector of the economy, the guidelines make it clear we are likely to regard such agreements as significant where they involve a combined market share in excess of 25%, or where they fix prices, considerable fines could be imposed," the letter warned.
Safeway spokeswoman Emma Mason said the fine could be up to £900m – 10% of the companys turnover. "Safeway had taken a risk in showing the letter to FFA, but it wanted them to understand fully what they were up against," she said.
"We feel that as an industry we all need to sit round a table and take this forward. We would welcome such talks and want to be an active participant."
lSainsbury has also agreed that FFA should be represented as well as NFU at meetings with the supermarket. *