The British Office of Fair Trading recently found that Wal-Mart, along with several dairy conglomerates and other supermarkets, has been fixing dairy prices in Britain. Wal-Mart now has to pay over $100 million in fines. For more, check out this article:
U.K. supermarket giants J Sainsbury PLC (SBRY.LN) and Asda, a subsidiary of Wal-Mart Inc. (WMT), Friday admitted fixing milk and cheese prices and have agreed, along with a number of dairy firms, to pay fines totaling more than GBP 116? million.Safeway, which is now owned by WM Morrison Supermarket PLC (MRW.LN), following a near-GBP 3? billion acquisition in 2003, also admitted its involvement.
U.K. watchdog the Office of Fair Trading Friday said that the three supermarkets, as well as a number of dairy firms - including Dairy Crest Group PLC (DCG.LN), The Cheese Co. and Robert Wiseman Dairies PLC (RWD.LN) - admitted engaging in anticompetitive practices and agreed to pay individual penalties.
On Sept. 20, the OFT said it had provisionally found evidence that 10 companies, including supermarket chains Asda, Safeway, Morrisons, Sainsbury's and Tesco Group PLC (TSCO.LN) and a number of dairy firms had colluded to increase the retail prices of milk, butter and cheese products in 2002 and 2003.No agreement has been reached in other cases involving allegations against Tesco, Morrisons and dairy firm Lactalis McLelland. Investigations continue.
The OFT said companies that accepted liability and agree to fully cooperate in the investigation will receive a "significant reduction" in the financial penalty they would have had imposed on them.
"The OFT is very pleased that the early and constructive cooperation of Asda, Dairy Crest, Safeway, Sainsbury's, The Cheese Co. and Wiseman, has enabled some of this case to be resolved effectively and swiftly, which will significantly reduce the costs of pursuing the investigation to the OFT and to the businesses concerned," the watchdog said.
Another dairy company, Arla, has been given complete immunity from punishment after agreeing to fully cooperate in the probe. Arla is alleged to have facilitated the exchange of commercially sensitive information on liquid milk products between certain retailers.
J Sainsbury Friday said that it agreed to a settlement of GBP26 million with the OFT and would cooperate fully with the investigation.
"We are disappointed that we have been penalized for actions that were intended to help British farmers, but recognize the benefit of a speedy settlement with the OFT," Sainsbury Chief Executive Justin King said in a statement.
King added that the "price initiatives" were widely and publicly reported at the time and were designed to help the British dairy farmers during a time of "considerable economic pressure and public debate about whether farmers were getting a fair price for their products."
Greg Lawless, a retail analyst at Blue Oar Securities, said that the fines dished out to retailers and dairy companies were unfair, given that the price rises were passed on to the farming community, which was facing tough times during the early part of the decade. There was a political will for this to happen at the time, he said.
"The fines could have been far greater," he said.
Sainsbury's GBP26 million fine represents around 5% of the supermarket's pretax profit for the year, going on Blue Oar's forecasts of GBP500 million.
Asda said in a statement that it regretted what had happened and that it would fully cooperate with the OFT.
"Our intention was to provide more money for dairy farmers, who were under severe financial pressure at the time. These issues concern all the major supermarkets, but we've chosen to settle this matter quickly because we believe it's the right thing to do for our customers," Asda said in a statement.
Tesco Executive Director Lucy Neville-Rolfe said that Tesco had acted independently at the time and had not colluded with others.
"Our position is different from that of our competitors and we are defending our own case vigorously," she said.
At 1410 GMT, shares in Tesco, Sainsburys and Morrison remained relatively flat, while dairy companies Robert Wiseman saw shares up 2.8%, with Dairy Crest up 6.5%.
Dresdner Kleinwort analyst Victoria Watson said that a swift resolution by the OFT is positive for Dairy Crest, as it had been an overhang on its shares.
Dairy Crest's GBP9.4 million fine was relatively small given its fiscal 2008 revenue estimates of GBP1.5 billion.
Company Web site: http://www.oft.gov.uk
-By Daniel Thomas, Dow Jones Newswires; 44-20-7842-9264; dan.thomas@dowjones.com
Posted by James - December 7, 2007 12:23 PM
Well if you think changing wal-mart is going to change America you people are sad. The only thing that will change our beautiful nation back to the right ways is going out and making changes around their neighborhood. A store is not the answer, try punishing your childern, clean up a park, get a new president, fight child abuse, fight drugs, fight poverty, or do something. There are thousands of ways to change our nation and they have nothing to do with where you buy your school supplies, clothes, christmas presents, or whatever you may buy. It all depends on what you do to help others and yourself.
Posted by troche - December 8, 2007 06:19 AM
The fallacy of the retail grocery business.
They all say that we don’t want to be like Wal-Mart.
The big unions and big grocers say that Wal-Mart treats their workers bad and we never want to be like them.
Yet they are no better and perhaps worse.
In this location they, the bad guys (Wal-Mart) start their people at $8.00 per hour. The retail agreement starts their people at $7.80, just because the minimum wage has gone up. This agreement was formulated by big union and big business. Wal-Mart gives their people insurance in a year. So does the good guy ( big grocers). The grocers give their people regular increases in wages, it takes 2 years to get to $8.00 per hour. Wal-Mart start their people at $8.00.
That sounds fair. In the last contract, again, agreed to by the union and big grocery the people got 50 cents over 5 years and that was for the journeyman. All the lesser people received a longer time to become journeyman, 7 years or more, because they don‘t get near full time.
Wal-Mart is not the bad guy! The bad guys are the big unions and big grocers! Shame on both of them!
The union has no power to help the people. Yet they talk like they do.
Right now the grocers have a plan to weed out the higher paid people (the journeyman) by changing the way they figure the labor per store. A large part of the hours are to go to the lower wage people. The union hasn’t done anything about it.
The result for the people are. Journeyman will not be able to make it on less hours. The union will be full of part time low waged people, that will never care about a union. The union loss it all in the end.
The grocers will have what they want. A crew of low paid, uninsured, temporary, not caring people. The grocers will pay for this to by having higher prices than Wal-Mart and a more uncaring crew, that won’t put up with the demands of the grocers.
We will end up with a very large group of people that will generate a huge burden on society.
The union blames big grocers and the grocers blame Wal-Mart.
Is there any hope for the people?
Not with big business trying to make that bottom line bigger, by the nose of the people. And not by the big union that must keep their place by the nose of the people.
The People have no power, unless they take the power for themselves.
Salem
Posted by harry hadley - December 31, 2007 07:33 PM
from your own account walmart pays a poverty wage. the where does that put safeway the leader in reducing the wage for profit, their ceo even says the profit is coming from the reduction in retail labor cost. the .10 an hour per year for the last 5 years has put the clerk on the down hill side that will never be corrected
Posted by bhd - December 31, 2007 07:43 PM