MPs attack car industry overcharging

BRITISH MOTORISTS are paying too much for their cars compared with their European counterparts, according to a powerful cross-party committee of MPs.

In a hard-hitting report, the Commons Select Committee on Trade and Industry raised the idea of imprisoning the heads of car manufacturers found guilty of anti-competitive behaviour "as a mark of public anger".

The MPs called on the Government to end the current exemption from European competition rules that allow car manufacturers to set up exclusive relationships with franchised dealers.

They said the Office of Fair Trading (OFT), which is already looking at claims that the car industry operates a cartel, should investigate whether the huge price differences between Britain and the rest of the EU were a sign of anti-competitive behaviour.

They also found:

The car market would be more competitive if there was less power in the hands of the manufacturers.

UK car importers may have distorted competition by not lowering prices in line with currency movements.

British consumers suffer poor quality garage servicing.

Second-hand car prices are too high.

Existing powers of competition regulators are "feeble".

The report said: "The current price differentials between the UK and other EU countries are far beyond those formally regarded by the European Commission as acceptable."

It added that existing powers for the director-general of fair trading to levy a fine of 10 per cent of turnover for anti-competitive behaviour were an insufficient deterrent. "If there is found to have been grossly anti-competitive behaviour... it is our view that due consideration will have to be given as to whether criminal penalties should be available as a deterrent to such behaviour in future, and a mark of the weight of public anger," the MPs said.

They pointed to existing powers to impose prison sentences for those who destroy or falsify evidence to the OFT, saying this was a "measure if the seriousness with which Parliament views such behaviour". Martin O'Neill, the committee chairman, added: "We want to put the frighteners on the big corporations. They are noted for their arrogance."