Warning: price collusion can lead to disqualification
"The food sector is very much in the spotlight following the 2003 Office of Fair Trading (OFT) investigation into suspected retail pricing in the fresh dairy milk and butter sector," Adam Collinson, a partner at law firm Eversheds, said. "The stakes, in terms of personal liability, are getting higher than they ever have been."
Speaking at Food Manufacture's Business Leaders' Round Table* in London last month, Collinson said: "The OFT's investigation into the dairy sector gave it cause to believe suppliers and retailers across a much wider area of the retail sector might be engaging in this type of practice and so in April 2008 it started an investigation into the wider grocery sector."
In the dairy case manufacturers at the "hub" of a wheel of dealing, were accused of sharing commercially sensitive information between retailers on the rim along so-called "spoke" communication routes.
"Suppliers sometimes hold commercially sensitive information that belongs to their customers in terms of their future pricing intentions," said Collinson. "And exchanging that information with other customers can sometimes result in an unlawful agreement involving both the supplier and the customer."
For companies not subjected to the scrutiny of the recent OFT investigation, he warned: "You won't necessarily have had the opportunity to expose the failings or shortcomings within your businesses, which could come back and bite you at a later date."
He added: "If you are a director, you don't have to be personally involved in a competition law infringement to run the risk of disqualification." Failure to keep yourself informed about such practices in your firm is enough.
However, Malachy McReynolds, md of chocolate confectionery firm Elizabeth Shaw said: "I don't know why the competition authorities are so worried about price collusion. Price collusion is impossible because of the availability of information on the internet."
Click here to read more coverage of the debate.
* Food Manufacture's business leaders' round table debate was sponsored by Eversheds, lean consultancy KM&T and foreign exchange specialist World First.
