The Cooperatition Incubator

Unpublished letter to The Times newspaper

Dear Editor,

Whilst Alex Spence and Robert Lea (“Supermarkets fined over fix that raised dairy produce by 2p”, The Times, 11 August 2011) suggest Tescos response to the OFT’s recent judgement is extraordinary, the true problem lies in the bigger picture. Tesco are indeed right that the competition system needs reform by the coalition government. This is a process that is already underway and should take effect in a year or so.

Our research and campaign of the past three years has highlighted that the OFT presently appears to be unable to integrate public interest factors into their analysis and decisions – even though this was the original intent of parliamentarians introducing competition law reform back in 1997/8. Whether the supermarkets acted collectively or unilaterally to increase prices at the farm gate, the reality is that UK dairy farmers were demanding price increases to survive and they had broad public support for a fairer deal.

It is now vital that new competition legislation provides a framework for the OFT’s successor body to balance public interest factors, supported by guidance, tools and ways of working with government departments expert in specific areas. There is now support for change from the Prime Minister and across the party political spectrum. The Food Ethics Council rightly say: “The UK government should work with the OFT and consumer groups to develop publicly accountable mechanisms whereby businesses can collaborate to make progress on sustainability that is in the public interest.” Without this action, improved coregulation and responsible business practice will continue to be stiffled.

Yours sincerely,

Andrew Dakers
Founder, The Cooperatition Incubator – www.cooperatition.org

Two recent pieces of media coverage questioning the effectiveness of the present design of Responsibility Deals/ voluntary agreements are worth reading.

A story that headlined the Daily Mail on 1 August 2011 revealed how the usage of plastic bags has once again start to rise despite the WRAP-coordinated Responsibility Deal.  In follow-up Marks & Spencer acknowledged on 9 August that charging for plastic bags was the only effective way of tackling the problem.  However as our Plastic Bags case study explains, under the present competition law framework supermarkets can only co-ordinate on charges, and their timing, if an exception is made by the Competition Minister at BIS.   The 2008 Defra-led Impact Assessment (see pages 103-4) sets out why the Competition minister needs to use his powers.  Alternatively legislation will be required, which would miss out on benefits available through business cooperation, such as increased flexibility of solutions and drawing more fully on businesses’ on-the-ground knowledge.

In the same week, criticism has also been mounted in the BBC’s Panorama programme ‘Dying for a drink’ regarding the effectiveness of the Public Health Responsibility Deal and government advisory groups.  Again many of the complaints come back to pricing controls and the present inability of the coregulatory initiative to use this tool.