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Monday, August 9, 1999 Published at 13:13 GMT 14:13 UK

Business: Your Money

'Rip-off' companies face huge fines

The fines are one of a series of measures aimed at protecting consumers

Companies involved in price-fixing could be fined millions of pounds under plans announced by the government.

The BBC's Denise Mahoney: "This could mean good news for shoppers"
The proposals would give the Office of Fair Trading (OFT) the power to fine firms, retailers and service providers up to 10% of their annual UK turnover for a maximum of three years.

The new laws are due to come into force next March, and could result in fines of more than £100m.

The Trade and Industry Secretary, Stephen Byers, wants to crack down on firms which overcharge or join price-fixing cartels.

"For too long the British consumer has paid the price for uncompetitive behaviour through higher costs," he said.

"With these new penalties it will be the companies who flout the law that will pay the price."

Trade and Industry secretary Stephen Byers and his Conservative shadow Angela Browning on the proposals
The move comes in the wake of Friday's measures to bring down the price of replica football strips, announced by the OFT.

The government has made it clear in recent weeks that it is determined to stamp out what it has described as the culture of "rip-off Britain".

[ image: UK prices will be compared with those in other countries to see which are too high]
UK prices will be compared with those in other countries to see which are too high
It is setting up an international "shopping list", which will compare prices for similar products to show which ones cost more in the UK.

And there will be new powers to stop con artists and rogue traders from doing business.

A White Paper published in July contained 70 measures to protect consumers, including a digital kitemark system for Internet traders and a consumer advice Website.

'We need confident consumers'

Mr Byers said then: "We need to recognise that many people feel they are living in 'rip-off Britain'.

"We don't want to create an army of Victor Meldrews, but we do need more confident and informed consumers."

The OFT's John Bridgeman: "Consumers need this to stop them being taken to the cleaners"
Laws which penalise companies already exist in Europe, and have led to big fines for firms including ICI, Tate and Lyle and Volkswagen.

The power to impose penalties will rest with John Bridgeman, the Director General of the OFT.

[ image: Volvo admitted price-fixing but escaped a fine]
Volvo admitted price-fixing but escaped a fine
Companies will also be forced to co-operate with price-fixing inquiries. Those which refuse face fines and bosses could even be sent to prison.

Last month, the UK arm of Volvo admitted it had been involved in price-fixing.

Mr Bridgeman agreed to accept a promise of future good behaviour rather than sending the case to the Restrictive Practices Court, which could merely have ordered Volvo not to do it again.

Under the new law, the company could have been fined up to £70m.

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