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Wednesday, March 10, 1999 Published at 18:05 GMT


Business: The Company File

Wiping out the rip-offs

The OFT is tackling the controversial subject of football TV rights

Some of the UK's major industries are under investigation amid allegations that customers are getting a raw deal.

There are growing fears from the government and the public alike that consumers could be losing out in a major way

The cost of companies abusing the market and shutting out competition has been conservatively estimated at billions of pounds a year in the UK - equivalent to 1% of the total output of the country.

Cartels can add up to 10% to prices of both industrial and consumer goods.

Now the government and the Office of Fair Trading, the country's competition watchdog, are looking to bust these cartels to save consumers vast amounts of money.

The government is planning to carry out a study comparing prices paid in the UK and other countries. This could result in further areas being investigated.

The industries currently in the dock include:

Over-the-counter drug suppliers

The OFT has started High Court proceedings to end price fixing of medicines.

Branded medicines are far more expensive than own label remedies. For example Nurofen typically sells for £1 more than a box of ordinary painkiller.

The OFT told BBC News Online that it expected the Restrictive Practices Court to decide on Thursday whether to take the matter further.

The OFT estimates that if the practice was stamped out it would save UK consumers in excess of £200m a year.

Supermarkets


[ image: Supermarket's high profit margins are under attack]
Supermarket's high profit margins are under attack
Grocery shoppers will soon learn if they are being charged too much by the big supermarket chains.

The OFT are examining accusations that Tesco, J Sainsbury, Asda and Safeway are earning excessive profits by not passing on cost savings to customers.

The OFT now plans to release its delayed report by the end of the month.

TV football rights

The OFT is attempting to persuade the Restrictive Practices Court that the £743m contract between football's Premier League and BSkyB and the BBC to televise matches acts against the public interest.

In a legal battle which could have widespread implications for the UK's most popular sport, the OFT believes that the league is acting like a cartel in brokering a collective TV deal on behalf of 20 clubs.

The decision could also have a crucial bearing on BSkyB's proposed takeover of Manchester United.

New cars

UK car prices are up to 50% higher than in some parts of Europe.

The huge disparity in prices has not escaped the attention of the European Union's competition authorities, who are investigating the matter.

The OFT are also looking at allegations that car manufacturers are guilty of operating a 'complex monopoly' by only selling to restricted dealers at recommended prices.

Banks and financial services

The government has launched a review into the whole banking industry aimed at finding out whether large financial institutions pile too many charges onto customers.

Electricity industry

Stephen Byers, the Trade and Industry Secretary, has said he is concerned about the wide variation in prices charged to consumers for electricity - which is an significant component of any household budget.

He plans to take the matter further by reviewing prices with the electricity regulator.

Airports


[ image: The airport operators may be flying into trouble]
The airport operators may be flying into trouble
BAA's dominance of the airport industry in the UK is under review.

BAA runs London's three largest airports - Heathrow, Gatwick and Stansted.

The company argues that it has invested heavily in the airports to provide better services for customers, but the government may move to break up its London monopoly.

Water companies

The government is concerned about the conspicuous lack of new entrants into the water industry over the past few years.

It is keen to stimulate competition to improve prices charged to industrial and commercial consumers.

It is expected that the water regulator will be asked to look into the problem.



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