§ Mr. Severasked the Secretary of State for Prices and Consumer Protection if he will make a statement on the discussions held by the Director General of Fair Trading with the processing companies following the Monopolies and Mergers Commission report on frozen foods.
§ Mr. John FraserThe Director General has concluded his discussions with the three major processers of frozen foods—Birds Eye Foods Ltd., Findus Ltd. and Imperial Foods Ltd. In Accordance with the one recommendation in the Commission's report, Birds Eye has undertaken not to give retailers discounts in return for a commitment to reserve cabinet space for the company's products, which the Commission concluded put at a disadvantage smaller suppliers seeking to introduce their products into the retail market and which restricted competition between the three major suppliers. I regret that it has not been possible to obtain similar undertakings from the other processing companies. However, the undertaking given by Birds Eye will be reviewed by the Director General if the granting of such discounts by other processers causes detriment to Birds Eye.
The Commission was critical of Birds Eye's past practice of loaning freezer cabinets on restrictive terms. The Director General has confirmed that Birds Eye has now stopped making loans of refrigerated cabinets to retailers and that the company has no intention of resuming this practice.
The Commission said that it would be a matter of serious concern if Birds Eye were to attempt to build up its business in the home freezer sector of the market by running County Fair at a significant loss over an extended period. The Director General is satisfied that County Fair is now making a profit.
Birds Eye has demonstrated to the Director General that it has changed its discount arrangements, as foreshadowed in the Commission's report, but to establish fully whether these arrangements are likely to encourage competition and efficiency in distribution would require a detailed inquiry. The Monopolies and 133W Mergers Commission is currently investigating the general question of the relationship between cost-saving and discounts paid to retailers and I have decided to await the Commission's report before considering what further modifications it may be necessary to propose in the case of discounts relating to the frozen foods industry.
I shall be asking the Director General to keep under review the operation of the undertaking given by Birds Eye. Copies of the undertaking will be placed in the Library.