§ Mr. Bowen Wellsasked the Secretary of State for Trade whether he considers that the undertakings given by the Kellogg Company of Great Britain Limited following the 1973 Monopolies Commission report on the supply of ready cooked breakfast cereals are still appropriate; and if he will make a statement.
§ Mrs. Sally OppenheimThe Kellogg Company of Great Britain Ltd. has made representations to the Director General of Fair Trading that the company should be released from undertakings given by Kellogg to the Secretary of State following this report. These undertakings require Kellogg not to increase prices of ready-cooked breakfast cereals without the Government's approval and to provide information on costs, prices and profit rates. The undertakings are monitored by the director general under Section 88 of the Fair Trading Act.
The director general has informed my right hon. Friend that, since the undertakings were given by Kellogg, the company's profitability has been consistently below the level which the Monopolies and Mergers Commission regarded as reasonable. Moreover, the director general accepts that in present circumstances it is unlikely if Kellogg was free to make its own pricing decisions that it would be able to increase its profitability to the high levels that prevailed in the late 1960s. The director general has therefore advised my right hon. Friend that Kellogg should be released from the undertaking to obtain Government approval for price increases.
The director general has also advised, however, that there has not been a sufficient change in the structure of the market for ready-cooked breakfast cereals to justify releasing Kellogg from its undertaking to provide information to the Office of Fair Trading on its prices and on the profitability of its domestic sales of ready-cooked breakfast cereals. The director general considers that the continued provision of this information will enable him to keep Kellogg's performance under review and to use his powers under the competition legislation for a further investigation of this market should that seem appropriate.
My right hon. Friend has accepted the director general's recommendation and agrees that it would be appropriate for him to keep the breakfast cereal market under review. Kellogg has agreed to continue to supply the required information.