OFT threatens Wiseman over Scots milk prices

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The Independent Online

Robert Wiseman Dairies was dealt an unexpected blow yesterday when the Office of Fair Trading said it might impose changes to the prices that Scotland's biggest milk producer could charge for milk north of the border.

The OFT said the possible measure was designed to prevent "serious, irreparable damage" to Claymore Dairies and its parent company Express Dairies, and to protect the public interest.

The imposed changes that Wiseman faces would be to its dealings with "middle-ground" customers. These are shops which are smaller than supermarkets but bigger than corner shops.

The OFT said in a statement: "The proposed direction [of the price changes] would have the effect of limiting the extent to which Wiseman's maximum price in Scotland for fresh, processed milk to middle-ground customers, could exceed its minimum price in the Highlands."

This will mean that the company, which controls 80 per cent of Scotland's milk market, would either have to increase its prices in the Highlands, or reduce charges in other parts of Scotland. One analyst said yesterday: "Some people think Wiseman has been selling milk 20 per cent lower than it should be in the Highlands. Whatever it now does, it means a loss of margin." The company's shares fell 1.5p to 123.5p.

Wiseman has been the subject of scrutiny by the competition authorities since last year. In December the Competition Commission ruled that the company might be operating a monopoly against the public interest. But the Commission's board could not reach a two-thirds agreement and so the Secretary of State for Trade and Industry, Stephen Byers, had to disregard the findings. Mr Byers asked the OFT to keep an eye on the sector

Wiseman, under its chairman Alan Wiseman, yesterday declared it was "disappointed" with the announcement. It said it would take up the OFT's invitation to challenge the price changes by presenting its arguments to John Vickers, the director general of fair trading, by 9 July.

Wiseman attributed its latest going-over by the competition regulators to complaints by its arch-rival Express Dairies.

Express entered the Scottish dairy market two years ago when it purchased Claymore. Since then it has struggled to attain market share and has believed that Wiseman has unfairly controlled the price of milk. Express would not comment yesterday.