In the UK, the Office of Fair Trading has concluded a three year investigation by bringing charges against the main supermarkets for price fixing with dairy producers, naming Asda, Morrisons, Safeway, Sainsbury’s and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman. They claim consumers were defrauded of £ 270 million in 2002 to 2003. Naturally, accusations were denied, although it is unlikely that the OFT would bring a frivolous claim.
From a business perspective, this could be damaging to the supermarkets in the short term. They can be fined 10% of turnover if the charges stick. However, from a consumer perspective it is more worrying because it is unlikely to affect consumer behaviour as a lack of knowledge and care impedes changing habits. And from a bigger picture perspective, this is another sign that consumers will sacrifice choice for convenience. While it might be argued that the scale of supermarket’s operation reduces costs to consumers, it is questionable that this matters because consumers who are price sensitive tend to buy low quality products and junk food (think sugar and fat eg sweets and crisps) that reduces their health and quality of life. It is also certain that the monopolistic power of chains destroys local small business, smaller independent producers, jobs and wastes a lot of food. The best way to change this is for consumers to choose local and support local retailers and for local retailers to cooperate in sourcing through open associations (which is not happening). In the meantime the work of watchdogs like OFT is critical.
Comments