§ Mr. Terry Walkerasked the Secretary of State for Prices and Consumer Protection when he expects to publish the report of the Monopolies and Mergers Commission on the supply in the United 261W Kingdom of wheat flour and of bread made from wheat flour.
§ Mr. John FraserThe report is being published today.
The Commission found that monopoly conditions, as defined in the legislation in force when the reference was made, prevailed in respect of the supply of flour because each of the three major milling groups, Associated British Foods Limited, Ranks Hovis McDougall Limited and Spillers Limited, required its respective flour-using subsidiaries to buy their flour from the group's own mills so far as it was possible to do so. Consequently, about 51 per cent. of the market for flour was closed to competition from other millers. The Commission concluded that the three groups by virtue of this practice were so conducting their respective affairs as to prevent or restrict competition, but they further concluded that neither the flour monopoly conditions nor any of the things done by the groups as a result of or for the purpose of preserving the conditions operated or might be expected to operate against the public interest. The Commission considered whether monopoly conditions existed by virtue of the three groups so conducting their affairs as to restrict competition in the supply of bread, but found that no such conditions existed. In considering this question they examined, among other matters, the uniformity of list prices, but concluded that there had been competition in discounts and other inducements, and thus in net prices, when and to the extent that statutory provisions had not prevented this.
The Commission said that any consideration of the existence or effect of possibly anti-competitive conduct must take account of the fact that before and during the period of its investigations both the flour and bread industries had been subject to a substantial degree of statutory control and official pressure.
The Commission examined several ways in which the flour monopoly conditions might affect the public interest, having regard to the effect of the wide disparity in profitability between the milling and baking activities of the three groups. They were satisfied that the groups were not deliberately depressing the profitability of baking or manipulating the price of flour, but they suggested 262W that the situation might need to be reexamined if modification of official controls led to the three big groups making better profits on baking while milling profitability remained high.
The inquiry uncovered 77 undisclosed restrictive agreements relating to bread discounts operated by the three major groups or their subsidiaries particulars of which had not been furnished to the Director General of Fair Trading. Details were subsequently reported to him and the agreements, which had by then been abandoned, were registered.
In the absence of any finding of adverse affect on the public interest there are no grounds for action by my right hon. Friend, but he has noted the Commission's suggestion that the profitability of the three groups might need to be reexamined in certain circumstances.
I understand that the Director General has taken proceedings against the parties concerned in respect of the failure to send particulars of the restrictive agreements for the register. There have been three occasions within the last three years in which a Monopolies and Mergers Commission investigation has revealed the existence of unregistered agreements. I find it particularly disturbing that on each of these occasions large firms have been involved who should have been well aware of the requirements of the law.