An across-the-board retail price rise for liquid milk should not cause concern to the OFT, according to Arla Foods UK chief executive Tim Smith.
Last week all the big four retailers increased the in-store price of a pint of milk by 1p, equivalent to around 2p/litre.
The fact that the rises took place simultaneously is unlikely to have escaped the attention of officials at the OFT, which is already investigating Arla, Dairy Crest and Robert Wiseman Dairies over suspected price-fixing initiatives.
But Smith laughed off the
suggestion that there had been any collusion in the lead up to the latest rises. He said they reflected increases in the cost of energy and plastic bottles, and would be felt to the same degree by all processors.
“There are similar things we buy in common that might impact on dairy businesses, such as fuel for raw milk collection and packaging. If you took each of our dairy factories as separate businesses, then the increases in these costs would be the same at all of them.” Smith said he would be surprised if the rises bothered the OFT because the reasons behind them were based on material facts. “We wouldn’t have got the rise past sophisticated supermarket buyers unless the justifications for it had been real.”
The OFT remained tight-lipped on the fresh wave of retail milk price rises. A spokeswoman said that its investigation was looking specifically at retail price hikes between 2000 and 2003.
Farmers’ groups, meanwhile, will be disappointed that none will find its way back to them. And Smith refused to rule out the possibility that there may be a further cut in milk prices to farmers next month.
Richard Clarke & Chris Walkland
Last week all the big four retailers increased the in-store price of a pint of milk by 1p, equivalent to around 2p/litre.
The fact that the rises took place simultaneously is unlikely to have escaped the attention of officials at the OFT, which is already investigating Arla, Dairy Crest and Robert Wiseman Dairies over suspected price-fixing initiatives.
But Smith laughed off the
suggestion that there had been any collusion in the lead up to the latest rises. He said they reflected increases in the cost of energy and plastic bottles, and would be felt to the same degree by all processors.
“There are similar things we buy in common that might impact on dairy businesses, such as fuel for raw milk collection and packaging. If you took each of our dairy factories as separate businesses, then the increases in these costs would be the same at all of them.” Smith said he would be surprised if the rises bothered the OFT because the reasons behind them were based on material facts. “We wouldn’t have got the rise past sophisticated supermarket buyers unless the justifications for it had been real.”
The OFT remained tight-lipped on the fresh wave of retail milk price rises. A spokeswoman said that its investigation was looking specifically at retail price hikes between 2000 and 2003.
Farmers’ groups, meanwhile, will be disappointed that none will find its way back to them. And Smith refused to rule out the possibility that there may be a further cut in milk prices to farmers next month.
Richard Clarke & Chris Walkland
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