O, Lord, won't you buy me a BMW ... but not in Britain

CARMAKERS and dealers in Britain could face a sweeping monopoly investigation into allegations of price-fixing and anti-competitive behaviour, it emerged yesterday. John Bridgeman, director-general of fair trading, said he was close to having enough evidence to refer the industry to the Monopolies and Mergers Commission (MMC).

He said the Office of Fair Trading launched an inquiry last month into allegations that a complex monopoly - a number of organisations acting anti-competitively - was operating in the market for new cars.

He was giving evidence to a cross-party committee of MPs investigating complaints that cars in UK showrooms are up to 60 per cent more expensive than on the Continent.

Mr Bridgeman said that if he found 25 per cent of all carmakers were acting anti-competitively he would refer the industry to the MMC, even if there was no suggestion the makers were acting as a cartel. It would be the second MMC inquiry in six years. "It appears to us that a major manufacturer has been engaged in anti-competitive behaviour and that by adding that to the smaller car companies we would have the 25-per-cent threshold in sight. It reassures us ... we should be pursuing the possibility that a complex market exists.

"We are already aware car prices are high by European standards and that they are causing a great deal of concern and we also have concerns about the behaviour of some firms operating in the UK market." Examples of companies acting anti-competitively could include bonus payments, offering to pay a dealer's marketing costs in exchange for a promise to stick to recommended prices or even threatening to withdraw the supply of cars.

The Consumers' Association urged the OFT to investigate its allegations that the new-car market was rigged and that prices in Britain were among the highest in Europe. It cited European Union research showing UK consumers pay up to 60 per cent more than their Continental counterparts, with most models 30-40 per cent more expensive.

A Ford Mondeo can cost 58 per cent more in the UK than in Spain, while a Nissan made in Sunderland cost pounds 9,000 in The Netherlands but pounds 15,000 in a showroom near the factory. The association said that if consumers tried to get a better deal by going to Europe to take advantage of the lower prices, they were given misleading information. Phil Evans, CA senior policy officer, told MPs on the Trade and Industry Committee: "The whole structure of the car market is rigged against the private consumer getting a good deal. We don't believe there is a need for cars to be sold by an exclusive dealers' network. We don't see why there should not be car supermarkets."

The industry vehemently denied allegations of anti-competitive behaviour. It said the reason for relatively high UK prices was the recent strength of sterling and different tax regimes across Europe.

The Society of Motor Manufacturers and Traders said actual new-car prices in the UK had gone up 2.5 per cent in the past two years, while sterling had strengthened by 25 per cent. The SMMT chief executive, Ernie Thompson, said: "We would submit that the primary reason for high prices in the UK is currency movements and not a movement in prices by UK manufacturers."

He defended the industry against MPs of both main parties, saying the UK market was highly competitive and that "the UK consumer gets a good deal from the motor industry".

Alan Smith, of the National Franchised Dealers Association, told MPs: "The retailer in this country will be operating extremely competitively and the result is very competitive prices."

Driving a hard bargain in UK

Ford Fiesta

1.25 Family 3dr

Netherlands pounds 6,854 UK pounds 7,495

Belgium pounds 5,682

Germany pounds 6,753

France pounds 6,253

Italy pounds 5,906

Ford Mondeo

1.8 CLX 5dr

Netherlands pounds 11,780

UK pounds 12,964 Belgium pounds 10,505

Germany pounds 11,454

France pounds 10,521

Italy pounds 10,815

BMW

520i 4dr

Netherlands pounds 24,254

UK pounds 22,644

Belgium pounds 20,306

Germany pounds 19,400

France pounds 20,178

Italy pounds 20,378

Renault Clio

Clio II 1.2 3dr

Netherlands pounds 10,031

UK pounds 9,924

Belgium pounds 7,893

Germany pounds 8,239

France pounds 8,395

Italy pounds 7,504

Rover 400

414i 5dr

Netherlands pounds 11,742

UK pounds 13,300

Belgium pounds 10,067

Germany pounds 9,469

France pounds 10,330

Italy pounds 9,193

Alfa Romeo

Alfa 145 1.6 TS L

Netherlands pounds 8,889

UK pounds 10,796

Belgium pounds 9,655

Germany pounds 9,788

France pounds 8,342

Italy pounds 8,059

FIGURES BASED ON RECOMMENDED RETAIL PRICES, USING 1 MAY EXCHANGE-RATE TO CONVERT INTO BRITISH CURRENCY.

INCLUSIVE OF TAX