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. |
British Airways has been fined £270m for their part in a price-fixing cartel. Fines were levied by both the US Department of Justice and the UK Office of Fair Trading following an agreement between British Airways and Virgin to fix the level of surcharges charged to passengers as a result of rising fuel prices.
Where’s Branson’s apology? BBC News Online (Robert Peston blog) (7/8/07)
BA’s price-fix fine reaches £270m BBC News Online (1/8/07)
OFT defends ‘snitch’ policy Guardian (5/8/07)
BA boss speaks out over price fixing Guardian (3/8/07)
How arch rivals colluded to hike up cost of air travel Guardian (2/8/07)
Questions
| 1. |
Define what is meant by the term ‘price-fixing cartel’. |
| 2. |
Explain the characteristics of a market that are most likely to result in a cartel. |
| 3. |
Discuss policies that the government could put in place to prevent this kind of price-fixing arising in the future.. |
The Office of Fair Trading (OFT) is to set up an investigation into the reality of ‘free banking’ to establish whether greater transparency in charging would benefit consumers. The articles linked to below consider the scope of this investigation and look at what some consider the ‘myth’ of free banking.
OFT probe into bank charges could mean end of ‘free banking’ The Scotsman (27/4/07)
‘Free’ banking could end as overdraft charges challenged Guardian (27/4/07)
Watchdog probes cost of banking BBC News Online (27/4/07)
Charges inquiry may spell end of free banking Telegraph (28/4/07)
OFT considers ending ‘free’ banking Times Online (27/4/07)
Q&A: Banking investigation and you BBC News Online (26/4/07)
Calling banks’ bluff BBC News Online – Robert Peston blog (26/4/07)
Free banking ‘myth’ to be probed Guardian (26/4/07)
Questions
| 1. |
Explain the reason why some people consider free banking to be a ‘myth’. |
| 2. |
Examine the likely impact of the market structure in the market for banking on the level of competition. |
| 3. |
Assess two policies that the government could implement to ensure that consumers get a fairer deal from their banks. |
Dutch brewers including Heineken and Grolsch have been fined a total of nearly £185m between them for stifling competition and sharing price information with the intention of fixing prices. This cartel was discovered by EU investigators and the fine has been imposed by the EU competition commission.
Dutch brewers fined over cartel BBC News Online (18/4/07)
Beer makers fined in Dutch price probe Business Week (18/4/07)
EU fines Heineken for fixing beer prices Business Week (18/4/07)
Heineken and Grolsch fined for price-fixing Guardian (18/4/07)
Heineken fined 219m euro for fixing beer prices Times Online (18/4/07)
Questions
| 1. |
Explain the conditions required for a cartel to develop. |
| 2. |
Explain the methods used by the brewing firms to fix prices in the beer market. |
| 3. |
Evaluate two policies that could be used by the EU competition commission to try to prevent cartels reemerging in the future in the brewing industry. |
In what is being heralded as a historic deal, the EU has reached agreement with the USA on what is termed an ‘open skies’ deal. This will allow EU-based airlines to fly from anywhere in Europe to anywhere in the USA and US carriers can operate to any European destination. So what will this deal mean for travellers, the environment and the airlines. The articles below look at the issues and also at the detail of the agreement, which still maintains many of the previous limitations on airlines and their ownership.
EU backing for ‘open skies’ deal BBC News Online (22/3/07)
Q&A: Open skies BBC News Online (22/3/07)
EU agrees open skies deal Guardian (22/3/07)
Open skies: Q&A Guardian (22/3/07)
Transatlantic fares set to tumble after ‘open skies’ deal Times Online(22/3/07)
Questions
| 1. |
What criteria should be used to assess the success of the ‘open skies’ deal? |
| 2. |
Assess the extent to which the ‘open skies’ deal will increase the level of competition in the transatlantic market for air travel. |
| 3. |
Discuss the options available to the EU to increase competition further in the market for air travel. |