France suspects industry of fiddling food prices

By Jess Halliday

- Last updated on GMT

French prime minister Francois Fillon has pledged to weed out food
companies that are using current high commodity prices as an excuse
to boost their own margins, even if they don't actually affect
their products.

Food prices in the country rose by between 5 and 48 per cent between November 2007 and January 2008, according to consumer watchdog 60 Millions de Consommateurs. But following a meeting between Fillon, finance minister Christine Lagarde, agriculture minister Michel Barnier and Luc Chatel, secretary of state for consumption and tourism, yesterday, the government said that the increases in commodity prices does not affect all food products. The state of the commodity markets cannot, therefore, be used to explain away the higher prices observed for certain products today. "The government is determined to take all measures necessary to develop competition and lower prices for consumers,"​ said a statement. Fillon has now asked Lagarde and Chatel to start an immediate enquiry into how margins of different economic operators are behaving. The aim is to bring total transparency about rises that can be attributed to international markets on the one hand, and rises effected by industry intermediaries and distributors. In addition, he has demanded that the first results of a survey of prices and margins for products in general distribution to be published by March 10. A first batch of 20 major products will be analysed by the end of this week, Fillon's office has said. The call-to-arms follows a meeting last November between President Nicolas Sarkozy and food producers and distributors, where the survey of prices and margins distribution was launched. Watchdog survey ​A separate survey of 1055 food products conducted by 60 Millions de Consommateurs found that the price of more than half increased between November and January. The worst hit products were those that use commodities as raw materials, such as cheese, yoghurt and pasta. The prices of some 200 products were seen to have increased by more than 10 per cent. But the watchdog, which publishes a monthly magazine, said that while the rise in milk and wheat prices is a clear explanation for some products, it is also a good pretext to increase prices of other products. French competition law ​The French government is currently seeking to introduce new laws on competition, which would include the creation of a new, stronger competition authority and reform rules on negotiating tariffs and competition between distributors. These reforms, which will compete a law passed on 3 January 2008, will allow distributors for the first time to pass on any discounts and advantages they receive from food producers to retailers.

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