Prices squad to reveal overcharging by shops

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The Independent Online
THE GOVERNMENT is to launch a new consumer unit to embarrass British retailers into cutting their prices by publishing regular figures showing that identical goods cost up to 50 per cent less in the rest of Europe.

The drive to give customers a better deal will be led by the Department of Trade and Industry (DTI) in response to ministers' concerns that companies were making huge profits by overcharging.

Starting later this year, a six-monthly league table will be printed comparing prices of everything from cars and computers to supermarket foods and clothes, The Independent has learnt. Ministers believe that the comparative price index, as it will be called, will shame British retailers into slashing the cost of goods with substantial mark-ups.

The crackdown follows a European Commission study which found that Britons paid up to 52 per cent more for a car than their European counterparts. An internal Treasury report also found that prices in Britain are on average 56 per cent higher for furniture and carpets, 54 per cent higher for hotels and eating out and 22 percent higher for electrical goods. Other studies have shown that supermarkets in Britain charge 36 per cent more than French stores and 54 per cent more than German stores for an average basket of goods.

The move is part of a new consumer-centred approach at the DTI that will be detailed in a White Paper to be published in the spring. "For too long, the DTI has been seen as a vehicle for mollycoddling business. It should be much more on the side of the consumer," a government source said.

The twice-yearly European price tables, which ministers hope will be published as supplements in newspapers, will use information supplied from market research companies and the Treasury's own regular updates of retail prices.

As well as allowing a fair comparison of British costs with those on the Continent, the initiative is seen as a means of ironing out differences ahead of the introduction of the euro to the United Kingdom.

The European Commission is encouraging as many retailers as possible to introduce dual pricing in euros and local currencies before the single currency's notes and coins appear in 2002. Once all prices are quoted in euros across Europe, the Commission believes retailers will find it tough to justify differences between different nations for the same goods.

The unit and its publication of price comparisons will spearhead a raft of proposals drawn up by Kim Howells, the Consumer Affairs minister, to inject greater competition into UK markets.

Other ideas include plans to allow the DTI to launch its own fast-track investigations into overpricing, separate from lengthy Office of Fair Trading (OFT) inquiries. The DTI also wants a complete overhaul of trading standards regulations and aims to "name and shame" companies in the UK who are found to charge much higher prices than similar competitors for identical goods.

The OFT is investigating motor-trade and supermarket prices, but is unlikely to refer the big four food giants, Sainsbury, Tesco, Safeway and Asda, to the Monopolies and Mergers Commission.

With increasing public resentment at the stranglehold the big four have over nearly 70 per cent of all food shopping, ministers want to show that they will not tolerate artificial price-fixing.

A survey by The Independent last month found enormous price disparities between different European countries. Taking into account exchange rates, Italy is the cheapest place for a Big Mac and the most expensive for a jar of Nescafe. Britain would be the place to buy the iMac but not the Tomb Raider 3 computer game. The cheapest Levi 501s would be in Germany and the dearest compact discs in France.