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Mr Ian Price
By email: ian.price90@ntlworld.com
Our ref Epic/enq/e/29734 Direct line 08457 22 44 99
Date 10 April 2008 Fax (020) 7211 8391
Email Enquiries@oft.gsi.gov.uk
Dear Mr Price,
Thank you for your email dated 2 April regarding Sainsbury’s and Tesco’s recent increases in price for vegetable oil from £2.21 to £2.98 for a three litre bottle.
By way of background the Office of Fair Trading (OFT) is responsible for making markets work well for consumers. We achieve this by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. Our primary duties include the enforcement of competition law, and the application of consumer protection legislation in respect of matters that adversely affect the collective interests of UK consumers. We also have a role in educating consumers, government and business, and taking informal action where appropriate. For more information on the work we carry out please visit our website at www.oft.gov.uk.
The main law covering competition in the UK is the Competition Act 1998 (the Act). In brief the Act contains two prohibitions. The Chapter I prohibition prohibits agreements, decisions or concerted practices between individual or organisations if they prevent, restrict or distort competition to an appreciable extent. The Chapter II prohibition prohibits abusive conduct by one or more businesses if they hold a dominant position within a relevant market within the UK. We have published guidelines on the OFT application of the Act, which can be downloaded from our website.
In general, the price that a business sets for a particular product or service is a matter for its own commercial judgement. The OFT does not have a role as long as prices are not arrived at by agreement, or do not reflect an abuse of a dominant position or anti-competitive practices in the UK. Further, there is no legislation that provides the OFT with the power to directly regulate prices of products within a competitive market.
The fact that some supermarkets are charging the same or similar prices for vegetable oil and have increased their prices at the same time does not, of itself, provide evidence of anti-competitive behaviour There are many instances where prices and price movements are similar between suppliers in a competitive market, such as in response to changing market conditions.
Our research indicates that food prices generally have increased in the UK and globally. With regards to vegetable oil there has been particular upward pressure on the price of cereal crop products and their derivatives. There have been significant shortfalls in production of oil seed in the EU coupled with increasing global demand for crops, such as rapeseed, for use in industrial processes, such as the production of bio diesel, and as animal feed. Overall the global demand for oil seed crops has outstripped supply and prices have risen. For further information on these issues we would refer you to the Home Grown Cereals Authority report on world oil seed at the link below.
The above being the case, there is no action the OFT could take on this matter under the Act. We appreciate the time you have taken in bringing this matter to our attention. Our intention, at this time, not to make further enquiries into this complaint does not preclude the OFT from revisiting the matter should further information come to our attention.
I hope this information proves helpful.
Yours sincerely
Philip Butcher
Philip Butcher
Enquiries and Preliminary Investigations
in short! tough $hit
By email: ian.price90@ntlworld.com
Our ref Epic/enq/e/29734 Direct line 08457 22 44 99
Date 10 April 2008 Fax (020) 7211 8391
Email Enquiries@oft.gsi.gov.uk
Dear Mr Price,
Thank you for your email dated 2 April regarding Sainsbury’s and Tesco’s recent increases in price for vegetable oil from £2.21 to £2.98 for a three litre bottle.
By way of background the Office of Fair Trading (OFT) is responsible for making markets work well for consumers. We achieve this by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. Our primary duties include the enforcement of competition law, and the application of consumer protection legislation in respect of matters that adversely affect the collective interests of UK consumers. We also have a role in educating consumers, government and business, and taking informal action where appropriate. For more information on the work we carry out please visit our website at www.oft.gov.uk.
The main law covering competition in the UK is the Competition Act 1998 (the Act). In brief the Act contains two prohibitions. The Chapter I prohibition prohibits agreements, decisions or concerted practices between individual or organisations if they prevent, restrict or distort competition to an appreciable extent. The Chapter II prohibition prohibits abusive conduct by one or more businesses if they hold a dominant position within a relevant market within the UK. We have published guidelines on the OFT application of the Act, which can be downloaded from our website.
In general, the price that a business sets for a particular product or service is a matter for its own commercial judgement. The OFT does not have a role as long as prices are not arrived at by agreement, or do not reflect an abuse of a dominant position or anti-competitive practices in the UK. Further, there is no legislation that provides the OFT with the power to directly regulate prices of products within a competitive market.
The fact that some supermarkets are charging the same or similar prices for vegetable oil and have increased their prices at the same time does not, of itself, provide evidence of anti-competitive behaviour There are many instances where prices and price movements are similar between suppliers in a competitive market, such as in response to changing market conditions.
Our research indicates that food prices generally have increased in the UK and globally. With regards to vegetable oil there has been particular upward pressure on the price of cereal crop products and their derivatives. There have been significant shortfalls in production of oil seed in the EU coupled with increasing global demand for crops, such as rapeseed, for use in industrial processes, such as the production of bio diesel, and as animal feed. Overall the global demand for oil seed crops has outstripped supply and prices have risen. For further information on these issues we would refer you to the Home Grown Cereals Authority report on world oil seed at the link below.
The above being the case, there is no action the OFT could take on this matter under the Act. We appreciate the time you have taken in bringing this matter to our attention. Our intention, at this time, not to make further enquiries into this complaint does not preclude the OFT from revisiting the matter should further information come to our attention.
I hope this information proves helpful.
Yours sincerely
Philip Butcher
Philip Butcher
Enquiries and Preliminary Investigations
in short! tough $hit
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