Tesco PLC and Three Other Major Supermarket Chains in the Middle of An Alleged Price-Fixing Probe By the United Kingdom's Office of Fair Trading

The UK's "big four" supermarket chains--Tesco, Wal-Mart-owned Asda, Sainsbury's and Morrisons--are being investigated by the Office of Fair Trading in an alleged food and grocery product price-fixing scheme involving about 100 major grocery brands. (Graphic: Daily Telegraph.)

Today's UK Daily Telegraph newspaper is reporting U.S.-based Wal-Mart, which owns the Asda supermarket chain in the United Kingdom, was the whistleblower behind the recently launched investigation into alleged price-fixing of food and grocery products by the nation's Office of Fair Trading (OFT).

The probe by the OFT involves the UK's "big four" supermarket chains: Tesco, Sainsbury's, Morrisons and Asda. The investigation into the alleged price-fixing schemes also involves over 100 leading food and grocery brands in the UK, owned by such global giants as Coca-Cola, Proctor & Gamble, Unilever, Cadbury and others.

In terms of the supermarket chain's involved in the probe however, today's Daily Telegraph report says as part of its whistle-blowing deal, Wal-Mart and its UK Asda division has been given immunity by the OFT should the investigation discover any cartel activity and a fine is imposed on the supermarket chains.

Any company found guilty of cartel activity could be fined under UK law by as much as 10% of its annual gross sales. A fine of 10% of Wal-Mart's annual sales would amount to $37 billion. A fine of 10% for Tesco PLC would cost the retailer about $7 billion.

It's important to note there currently is no accusation any of the supermarket chains or suppliers have worked together in any price-fixing schemes. Rather, a probe into whether or not this has occurred has been launched by the UK's Office of Fair Trading.

Below is the Daily Telegraph's coverage on the issue and probe:

[Click on the headline to read the story.]

Wal-Mart was whistleblower in OFT's supermarket investigation
100 leading brands in price-fixing investigation
OFT 'revenge' raids spark retail backlash
Competition probe exposes grocers' tactics
Supermarkets and suppliers: Inside the price war
Unilever and P&G targeted by OFT
Masters of the universe with billions to spend

Some of the 100 food and grocery brands owned by such major suppliers as Proctor & Gamble, Unilever and others being investigated by the UK Office of Fair Trading in a probe of alleged price-fixing by UK supermarket chains and suppliers. (Graphic: Daily Telegraph.)

This current OTF probe of alleged price fixing isn't the first involving the UK supermarket industry in recent times.

In fact, the current investigation is related to another one which involved price-fixing of dairy products. That probe resulted in a number of the UK supermarket chains and dairy suppliers paying fines as a result of the probe's conclusion.

The Daily Telegraph is reporting that as a result of that earlier dairy products' pricing probe, some senior Wal-Mart and Asda executives decided to go to the OFT with the new information regarding alleged price-fixing schemes involving the "big four" supermarket chains and the over 100 food and grocery brands.

All of the supermarket chains and suppliers being investigated in the probe have strongly denied they are involved in any price-fixing or cartel scheme.

Further, the UK Office of Fair Trading has yet to issue any statements other than to say they are investigating the matter.

No rapid conclusion is expected in the probe according to nearly all UK observers. Their consensus is the probe could drag out for years, and that it's likely to not reach any conclusions for at least two years.

More UK Retailers Jump On The 'Banish The (Plastic) Bag' Campaign

On March 4 and 5 we wrote here about the London Daily Mail newspaper's "Banish The Bags" campaign, which is designed to get retailers in the United Kingdom to come up with ways to dramatically reduce, if not eliminate, the use of single-use plastic carrier bags in their stores.

The anti single-use plastic carrier bags' campaign also is designed to encourage shoppers to bring their own "bags for life" to the store with them each time they go shopping. ("bags for life" are reuseable shopping bags.

Just a couple days after the Daily Mail began its anti-plastic bag campaign, with front page headlines, stories and graphics in its February 28 edition, UK grocery and hard/soft goods retailer Marks & Spencer announced it would start charging shoppers a per-plastic bag fee of about 10 cents U.S. if its customers want their purchases packed in a plastic carrier bag rather than in a paper or reusable tote bag.

As we reported here, just a week after the "Banish The Bags" campaign began, Britain's Debenhams' department store chain joined Marks & Spencer as the second major retail chain to announce it would start charging for the thin plastic shopping bags. Debenhams, which has about 320 stores in the UK, said it will soon begin a trail program, charging the equivalent of about 10 cents U.S. per plastic carrier bag, if shoppers' choose them over other options.

Now, less than two weeks after the "Banish The Bags" campaign began, a number of additional UK retailers are announcing various steps they plan on taking to reduce the number of single use plastic carrier bags they give away for free in their stores:

>UK High Street department store chain Woolworths says it will begin a trial in which the retailer will charge 1-pence per-bag fee for the plastic carrier bags. If the trail is a success (read, not too many shopper complaints), the company says it will rollout the scheme to all its stores. Woolies has 820 stores in the UK. The goal of the trail is to get shoppers to use reusable bags, the retailer says. The chain says it gives out about 220 million plastic shopping bags a year.

>B&Q, a general merchandise retailer, said a trial it has conducted in its stores in Scotland and North East, in which it charged 5-p (about 10 cents U.S.) in some of its stores, has resulted in an 88% reduction in the amount of plastic carrier bags those stores used during the trail period. It's expected B&Q will implement the per-bag fee in all its stores soon.

>Specialty retailer Help the Aged announced it will stop using plastic carrier bags in all of its shops in June.

>Oxfam, the non-profit group which operates retail shops in the UK, has also announced it will phase out using plastic shopping bags in all of its stores.

Additionally, two of the UK's 'big four" supermarket chains--Sainsbury's and Asda--have announced initial measures they say will reduce the amount of single-use plastic carrier bags their stores use to pack customers grocery purchases. (Tesco and Morrisons are the other two "big four" members.)

Sainsbury's, the UK's number two grocery market share leader, after number one Tesco, says beginning on March 24 it will instruct all store staffers to ask each shopper if they have brought back a bag from home they want to use before packing their groceries in a plastic grocery bag. The store clerks' also will tell each customer the stores' sell reusable bags, and ask them if they would like to purchase one or more and have their groceries packed in them rather than in a plastic bag.

Sainsbury's says last year it gave out for free 15 million "bags for life," which are reusable shopping tote bags. The retailer says it plans to continue giving out free reusable bags on a periodic basis to customers.

Our UK industry sources tell us they expect Sainsbury's to take further measures to reduce plastic bag use in its stores, since they agreed in February on a plan to reduce the number of single-use plastic carrier bags the chain uses by 25% by the end of 2008. Last year, Sainsbury's handed out 1.78 billion plastic carrier bags, which is the equivalent to about 68 for every household in Britain. (All of the "big four" UK supermarket chains voluntarily agreed on this 25% reduction.)

Asda, the number-three supermarket chain in the UK, announced it will remove its free plastic bag dispensers from its checkouts, where they currently are located, and put them behind the counter. Additionally, the chain, which is owned by U.S.-based Wal-Mart, Inc, says it will instruct its store-level employees to only use plastic bags if a shopper requests one. If one isn't requested, the store clerk is to use a paper bag, or if the shopper has one or buys one in the store, a reusable shopping tote.

The Co-op, another leading food retailer in the UK, has began a six week trial in which it is using a new type of home-compostable carrier bag as a way to cut down on the number of free plastic carrier bags it gives out in its stores. The bags can be tossed in a home compost pile. The bags biodegrade at a fairly rapid rate. The Co-op says it's goal is to stop using single-use plastic carrier bags in its stores completely.

Tesco, the UK's leading retailer (and the world's number-three retailer) with a 34% market share, hasn't made any changes regarding its single-use plastic carrier bag policy to date since the plastic bag banishment campaign started on February 27. The retailer, parent company to Fresh & Easy Neighborhood market in the U.S., announced shortly after the "Banish the Bags" campaign began, that it has no plans to either institute a per-bag fee or to eliminate the plastic shopping bags in its United Kingdom stores.

The UK's other leading grocery chains--Morrisons, Somerfield and Waitrose--haven't made any minor (like Sainsbury's and Asda) or major announcements to date in the wake of the "Banish the Bags" campaign. Our sources tell us to look for some type of an announcement from Waitrose in the next week.

It is estimated by goverment sources that British retailers give out about 13 billion free single-use plastic carrier bags each year. It's further estimated that on average each bag is used for 20 minutes, and then dumped in the trash.

It takes the plastic carrier bags years to biodegrade in a landfill, and of course many never make it to the landfill. The bags can be recycled. However, the infrastructure to do so is poor--and consumer plastic bag recycling behavior is even worse.