Britain gets tough over price-rigging

Firms which "rip off" consumers through price-rigging cartels face massive fines under plans being unveiled by the British government today.

The fines, which could amount to millions of pounds in many cases, are designed to end what the British government and the Prime Minister Mr Tony Blair have labelled "rip-off Britain".

In the past weeks, car firms have been found to be overcharging their customers by encouraging dealers to keep prices artificially high, while makers of replica football shirts were criticised for charging too much.

The Trade Secretary, Mr Stephen Byers, announced that companies engaging in anti-competitive practices would face a maximum penalty of 10 per cent of their UK turnover for each year of the infringement, up to a maximum of three years.

That means, for a company with a £200 million sterling (£167.4 million) turnover, a maximum fine of £60 million - or 30 per cent of its annual turnover - if it continues to break anti-competitive trading rules.

The new fines will be included in new Competition Act, which comes into force in March 2000 and will apply to nearly all goods and services on the supermarket shelves.

Ms Sheila McKechnie of the Consumer's Association said: "This is part of a whole revolution which is going on in the Department of Trade and Industry with the new tough Competition Act and new powers given to the Office of Fair Trading."

However, she told Sky News that Britain still had some way to go before catching with the US, where company bosses could be jailed for price-rigging.

She said: "We are not exactly getting ready to jail our chief executives but if they put hefty fines on we think companies will very quickly get the message."

Mr Byers said: "The level of these penalties will send out a strong message on behalf of the Government.

"We believe that competition is the key to economic growth and prosperity, and that it is necessary to ensure a fair deal for the consumer.

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

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

There will be a period of consultation on the penalties before the new fines go before Parliament

But Mr Byers signified his intention to act: "Too many consumers believe they are being ripped off. It is the Government's responsibility to make sure that the Office of Fair Trading and the Competition Commission can root out price-fixing wherever it occurs."

The Competition Act also provides the Director General of Fair Trading with new investigative and enforcement powers.

They include the right to require any person to produce specified information or documents and the right to enter premises using reasonable force.

In addition, the government has increased the OFT's budget by £15.4 million over the next three years.