Volvo admits illegal price-fixing in Britain

VOLVO, THE prestige Swedish car maker, admitted yesterday that it had been involved in illegally fixing prices in the United Kingdom.

It was the first time any manufacturer had owned up to the practice widely believed to explain why British consumers pay much higher prices for new cars than drivers overseas.

John Bridgeman, the director-general of the Office of Fair Trading (OFT), let Volvo off with a reprimand and accepted assurances that it would not do the same again, saying this would be faster than taking the company to court. He said Volvo had colluded with dealers who were fixing prices, and added: "This demonstrates a blatant disregard for UK law and an indifference to the exploitation of customers."

But Volvo escaped a fine of tens of millions of pounds by only a few months. From 1 March the OFT will have the power to fine offenders up to a tenth of the value of their UK sales.

The Competition Commission, which recently replaced the Monopolies and Mergers Commission, is to investigate all new car sales.

The European Commission is also likely to conclude that existing car dealership arrangements are uncompetitive after it completes a study of prices across the Continent. The Competition Commission is also scrutinising supermarkets and ice-cream sales. In addition, the Department of Trade and Industry is to investigate a wide range of goods to assess uncompetitive practices.

Stephen Byers, the Trade and Industry Secretary, is also determined to make the process of scrutinising proposed mergers less political in future. The competition authorities in Britain have always been far less tough than their American counterparts, where politicians have little influence on the process.

Leading article, Review, page 3

OFT investigation, page 4

Your Money, page 1