With a heavy heart, I read last week that a company I know is getting caught up in an OFT inquiry.

With a heavy heart, I read last week that a company I know is getting caught up in an OFT inquiry.

I called the chairman and offered my usual advice: take it very seriously, check all your procedures, call your lawyers straightaway and, if you find any contraventions, turn Queen’s evidence to plead for mitigation.

There have been several recent high-profile OFT investigations into retailers and suppliers. Some have been on suspicion of undisclosed anti-competitive conduct, such as at present in the sports goods retail sector.

There is also a sinister-sounding “investigation into certain retailers and suppliers” looking into “suspected breaches of competition law by a number of retailers and suppliers, across a range of product areas”. Presumably those under suspicion know who they are, having had their collars felt by now.

In April, the OFT announced fines totalling £225m on two tobacco manufacturers and 10 retailers. They found that the manufacturers had had agreements with retailers to link the prices of their brands to competitors’.

The first whistleblower got immunity; others got reduced fines for co-operating, which normally means confessing and going quietly without a fuss. One retailer escaped completely due to insufficient evidence.

The three-year inquiry into the dairy industry has run into difficulties. Initially, one retailer confessed to collusion between retailers and dairy processors to increase retail prices. Fines totalling over £116m across the industry were planned. In April this year, the OFT backtracked a lot, citing insufficient evidence, dropping many charges and reducing proposed fines to £70m. One retailer was fully exonerated, one partially and others got reductions for co-operating. The retailer that originally confessed must be feeling pretty sore about that.

There is a market investigation into price advertising, looking more like conventional consumer protection. Are price reductions genuine? Are price comparisons showing a true picture? Are pricing offers too complex? This study, lasting a year, should report this autumn.

Where companies have to be extra careful is where they are labelled ‘dominant’. A company is unlikely to be dominant with a market share of less than 40%, but may be presumed to be dominant with over 50%. You may only dream of having such a market share - rare in retail at national level. However, retailers may well have suppliers that do have such market positions. In this case, you have to be very careful as to whether your buyers may be colluding - even accidentally - by, for example, swapping information with a ‘dominant’ supplier.

There’s a saying in aviation that because there are so many rules and regulations, there is no such thing as an innocent pilot, just one who hasn’t been caught yet. The standards required of dominant companies are very similar to this. With a generally increasingly interventionist OFT, I suspect that many more retailers will think this way from now on.

Simon Laffin independent retail adviser and non-executive director