01 August 1998

THE ENDURING mystery of why new cars in our sceptr’d isle cost so much more than elsewhere in Europe looks set to be the subject of an investigation by the Monopolies & Mergers Commission. The cosy world of ring-fenced dealerships and the interesting sales practices of the motor industry at large are likely to come under serious scrutiny for the first time. Director-general of Fair Trading John Bridgeman told the Commons trade and industry select committee that he believes there is evidence that ‘a leading manufacturer was behaving anti-competitively’. By the end of this year, the OFT expects to have evidence of anti-competitive practice by 25% of car manufacturers, the threshold at which an MMC investigation can be triggered. Although no names were named, Ford of Europe immediately denied that it made a higher margin of profit from UK car sales than elsewhere in Europe: ‘If prices are higher it is because the pound has been stronger. Customers are open to exploit this price difference as well as suffer from it. If they can buy a cheaper Mondeo in Germany, we encourage them to do just that’, blustered a spokesman. Consumer bodies have long accused the car industry of price rigging.