The OFT chief executive has experienced setbacks in his many tussles with the grocery industry, but he’s certainly left his mark
John Fingleton called time on a turbulent seven years at the helm of the Office of Fair Trading last week. In that time, he has rattled the cages of many major players in grocery - but as often as not suffered embarrassing reversals following some of his most high-profile attacks.
He was front and centre in many of the OFT’s most prominent battles with the industry, including price-fixing investigations of dairy, tobacco and even major brands. However, early on in his tenure, the OFT did not think there was enough evidence to refer the groceries market to the Competition Commission. This decision was appealed by the Association of Convenience Stores and the OFT’s decision was quashed by the Competition Appeals Tribunal (CAT), an occurrence that was to become all-too familiar for Fingleton.
There has been plenty of speculation as to why he has chosen to go now, given he is the UK’s highest-paid civil servant. Much of this has centred on the planned merger of the OFT and Competition Commission, which was announced more than a year and half ago and has still to happen.
Fingleton has expressed his disquiet about the lack of progress and a senior insider confirms that the uncertainty the merger was engendering was probably at the heart of Fingleton’s decision. “He must have been thinking that this is going to be a tricky place to be for the next two years, trying to integrate the two bodies and get on with the day job,” he says.
The source also suggests that although the details of the merger have yet to be confirmed - an announcement is due in the next few weeks - the new body will not look exactly as Fingleton would like.
The Grocer understands that the main sticking point has been in relation to the OFT’s handling of its major cartel investigations. The OFT was forced into embarrassing climbdowns by the CAT over its probe into price-fixing in tobacco and the collapse of a criminal trial related to its allegations of price-fixing by British Airways. Indeed, Tesco is still appealing against its fine under the OFT dairy industry investigation.
“It seems that the government will want to beef up the powers of the new body in this area but that this would come under the CC’s wing,” says the insider. However, he also argues that for all the high-profile setbacks, the very fact Fingleton took these cases on will make companies more wary of these practices.
One senior competition lawyer who has locked horns with the OFT on a number of occasions is less charitable. “Apart from anything else, someone should carry the can for the quite appalling cost to private companies and to the public purse of some of these cases,” he says. “I am told that in the OFT brands case, some companies had to spend hundreds of thousands of pounds just paying for a specialist company to search their emails to answer some of the OFT’s questions, not counting the huge bills some of them would have incurred for lawyers and economists.”
Fingers in many pies
- Nov 2005: Competition Appeals Tribunal quashes OFT decision not to refer grocery to the Competition Commission.
- Dec 2007: OFT hands out fines totalling £116m to leading dairy producers and supermarkets over allegations of price-fixing in 2002-2003.
- Dec 2007: OFT hands out £116m in fines to leading dairy producers and supermarkets over allegations of price-fixing in 2002 and 2003. In 2010, the fines were reduced by £40m after new evidence came to light. Tesco continues to appeal.
- Apr 2008: OFT launched raids on big four in a probe into suspected price-fixing of leading household brands. Major suppliers such as Unilever, Coca-Cola, Nestlé and P&G were implicated, but the OFT dropped the investigation in 2010.
- Apr 2010: OFT fines retailers and tobacco giants £225m in another price-fixing investigation. The fines were later quashed by the CAT.