February 9, 1999. Copyright 1999. Graphic News. All rights reserved.

CRACKING DOWN ON CONSUMER RIP-OFF
By Margot Nesdale

LONDON, February 9, Graphic News: MINISTERS are vowing to put the squeeze on the great British rip-off to give consumers relief from over-priced goods and services.
They are cracking down on the car industry, supermarkets, computers and banks, all of which have been earmarked as the biggest price-riggers in Britain.
Stephen Byers, the Trade and Industry Secretary, is publishing a white paper this summer which will emphasise the need for manufacturers and retailers to offer prices comparable with the rest of Europe.
British motorists pay more than double for their cars than the cheapest European Union alternative, according to a recent report by the European Commission.
A Ford Mondeo cost £6,500 more to buy in the UK than an identical one in Spain
and a Fiat Bravo was half as cheap in the Republic of Ireland than in Britain.
Supermarkets in Britain charge 36 percent more for a shopping basket than in France, 45 percent more than in America and a staggering 54 percent more than in Germany.
Importers have taken to referring to Britain as ÒTreasure IslandÓ, a tribute to the exceptional profits they are now reaping.
An OECD study to be published later this month will confirm that the price of many widely traded goods and services is higher in Britain than in most other developed countries.
So why is this?
The inflated prices are by no means a reflection of wealth, because BritainÕs national income per head is about 10 percent lower than GermanyÕs and five percent lower than FranceÕs.
Petrol prices are a case in point. In his last budget, Chancellor Gordon Brown attacked fuel companies for profiteering, saying the 25 percent drop in oil prices had not been passed on to consumers.
However the office of Fair Trading reported that competition among petrol retailers was fierce and that real gross margins had fallen by a third from 6p to 4p a litre in the past seven years. The reason why petrol prices remain relatively high in Britain is because tax accounts for 85 percent of the pump price for four-star leaded petrol, one of the highest levels in Europe.
And while British supermarkets have net profit margins double that of those on the continent, high costs mean their returns on capital are as much as five percent lower.
High land prices make it harder to build mega-stores in the UK, and the average British supermarket is half the size of an American one and two-thirds the size of a typical French store.
It is more expensive to rent shopping space in the downmarket south London suburb of Croydon than in the poshest shopping streets of Milan, Stockholm or Dublin.
A study last year ranked LondonÕs Oxford Street as the third most expensive shopping mile in the world after New YorkÕs Madison Avenue and Hong KongÕs Causeway Bay.
Part of the reason for high rents is the strictness of British planning laws.
Weak competition laws are undoubtedly a large part of the reason for high prices and covert price fixing is not uncommon across much of British retailing.
Over the years the OFT has pursued hundred of price-fixing cases in products ranging from bicycles and birdcages to vacuum cleaners and video cassettes.
The GovernmentÕs new crackdown includes speeding up investigations and removing a loophole that allows car manufacturers and others to control prices by supplying only registered dealers. The government wants to scrap this Òblock exemptionÓ.
It also wants to Òname and shameÓ any companies found to be profiteering at the consumerÕs expense.
/ENDS.

Sources: The Economist, Reuters