Milk – is the price the white one?
A number of UK supermarkets, including Sainsbury’s, Asda and Safeway, have been fined £116m by the Office of Fair Trading (OFT) for price fixing. The OFT is still investigating other supermarkets, including Tesco which denies that it was involved in the price collusion. The collusion is estimated to have cost consumers around £270m in higher prices.
Supermarkets fined £116m for price fixing Guardian (8/12/07)
OFT hands out £116m in fines for milk price fixing Guardian (7/12/07)
Supermarkets admit milk price fix BBC News Online (7/12/07)
Videos
Farmers reaction to price fixing claims BBC News Online
Questions
| 1. | Explain how Sainsbury’s and the other supermarkets colluded to fix milk prices. |
| 2. | Assess the market conditions most likely to lead to price collusion in a market. |
| 3. | Examine the role of the OFT in reducing uncompetitive and restrictive practices in markets. |