Price fixing under the spotlight

- Last updated on GMT

Related tags: Robert wiseman dairies, Milk, Robert wiseman, Oft

Robert Wiseman Dairies is once again the subject of an Office of
Fair Trading investigation in Scotland, the third in recent times.

Practices used by Scottish milk market leader Robert Wiseman Dairies to attract new custom are once again under investigation by the Office of Fair Trading just a few months after the regulators announced that an earlier probe had revealed no wrong doing.

While the news, announced by Robert Wiseman Dairies last week, will undoubtedly be welcomed by Express Dairies, whose subsidiary Claymore Dairies is Wiseman's chief rival in the Scottish market, the new OFT investigation is not a direct result of its appeal against the earlier decision, according to press reports.

The probe will once again focus on the supply of milk to middle-ground retailers - in essence, small stores rather than supermarkets or doorstep delivery operators - after the OFT received new evidence about an alleged abuse of Wiseman's dominant market position, the Financial Times​ said.

No more details were offered by the OFT, and Wiseman's own management was also being kept in the dark about the exact nature of the investigation, the report continued.

The OFT ended its latest investigation into Wiseman's dealings with middle-ground retailers in October last year, saying that "although there are grounds for suspecting an infringement of the Competition Act 1998, further investigation is unlikely to lead to an infringement decision and does not warrant the commitment of further resources".​ The Competition Act prohibits companies from carrying out any practices which distort competition.

An earlier investigation into the company's general business practices in Scotland was ended in August last year, again exonerating the company.

The fact that Wiseman has come through two previous OFT investigations unscathed will certainly comfort it as it undergoes a third probe, although it is clearly disappointed that it must once again undergo the lengthy procedure.

As to the source of the investigation, a report in the Independent​ newspaper suggested that it could be related to the investigation into Express Dairies' proposed merger with the UK arm of Arla Foods. Earlier this month the OFT recommended that the Competition Commission investigate the merger because it would "lead to a reduction in the number of potential suppliers of fresh milk to the larger supermarkets - from four to three nationally and potentially from three to two in some regions".

If this were the case, it would indeed by ironic, given that Express has been the main company complaining about Wiseman's practices in the Scottish market. However, the likelihood of the OFT uncovering evidence now after two earlier investigations is slight, and it is Express whose business is likely to be affected by the OFT's analyses rather than Wiseman.

Related topics: Markets, Pricing Pressures

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