Sainsbury's and Asda have admitted fixing the price of milk and cheese following an inquiry by the Office of Fair Trading (OFT).The supermarkets, along with a number of dairy firms, have agreed to pay fines totalling at least £116m. Cases against Tesco and Morrisons will continue after no deal was struck.
The OFT said that its evidence found that while dairy product prices went up after the collusion, the price received by farmers did not increase.
Don't you just love that - the watchdog makes a deal with the firms who are being fined for making a deal. So who are the Grub Family here?
This is the downside of capitalism - cabals, trusts and price-fixing. Not a lot can be done really. At what point can a government step in and prevent mergers?
Their answer, of course - when it threatens to restrain free trade but what is free trade anyway other than cutting your rivals out of the market? The strongest survives and then it's irrelevant if the monopoly is state or private - the fat cat still pocket the dosh.
Try Aldi or Lidl they don't join in this stuff. On some exact brand comparisons recently - where they exist - Aldi was 50% cheaper than Waitrose...
ReplyDeleteWhat an uncharacteristically nihilistic post! Of course something can be done. Even libertarians believe in antitrust law. Also never underestimate the competitor yet to come. Bill Gates lives in fear of his market dominance being broken, precisely because he broke the market dominance of IBM. He knows it can be done. If you want to keep big business in line, make it as easy as possible to start a small business. Is it a coincidence that Microsoft and its youthful potential nemesis Google are American? I don't think so. Starting businesses in garages and bedrooms is in breach of planning laws in Europe. We make starting a business so bureaucratically difficult that it's amazing anyone does it. Big Business **wants** regulations to create barriers to entry and reduce competition. To keep your economy vibrant, rip those barriers down!
ReplyDeleteFor that matter, how about removing all death taxes on family businesses, provided they remain in the family for 5 years after the relevant death? Why force businesses to sell up to pay death tax, if you really want small family businesses to thrive? Every so often, one of them will find a good leader and rise up and throttle a monopolist.
If Marx got one thing more wrong than all the other things he got wrong, it was his theory of monopoly capitalism. Monopolies may arise in the private sector occasionally, but they will fester and die naturally. It takes the power of the State to keep one in sustained existence.
Well said, Tom. Big Businesses put up with regulation because the costs are the same for their mainstream competitors and punitive for prospective innovators.
ReplyDeleteIn a true free market, pricing is driven by the least rational competitor.
In my part of the world, we have the petrol price collusion. Price goes up and down but within a half hour every petrol station has the same price, no matter if it be Shell or Chevron or Petrocan or whatever brand.
ReplyDeleteIn other parts of North America you will see one petrol station with a different price right across from another one but not here.
I'm not surprised by this. Mutley is right, Aldi is good and Geoff always recommends them, though there isn't one in my town.
ReplyDeleteSeeing the Monopoly board has reminded me I must buy the Tott Hospurs version for my son's Christmas present, and the Cambridge version for my Headway Cambridgeshire friends.
Mutley, if I was in the UK, I would.
ReplyDeleteTom - I read this carefully - wise words.
Shades - by the less rational competitor, yes.
JMB - that's the type of thing I was thinking about.
Ellee - love the way your mind associates things.
Here people are aghast at the always increasing price of flour.
ReplyDelete