Watchdog unleashed on 'Rip-off UK'

THE Office of Fair Trading is embarking on a new get-tough approach to those who flout competition rules. Its hard line was demonstrated this week with record fines on Argos and Littlewoods for fixing prices of toys and games.

Led by director general John Vickers, the OFT will next month gain a huge increase in powers under the Enterprise Act. The fair trading cops have the backing of Chancellor Gordon Brown, keen to present himself as the scourge of 'Rip-off Britain'.

Under the Act, most decisions on mergers are being taken out of the hands of politicians and handed to the OFT and the Competition Commission.

Participating in a cartel becomes a criminal - not a civil - offence. Offenders will face draconian new penalties, including unlimited fines. Company directors could be jailed for five years or disqualified for up to 15 years. Investigators will have new powers of surveillance, including - in rare cases - the bugging of homes or business premises.

The OFT has already taken aim at several markets. Dixons and other electrical goods retailers may be hit after it referred the £500m-a-year market in extended warranties to the Competition Commission last year. JD Sports and JJB Sports are among those being investigated over alleged price-fixing of replica sports kits, while Boots is claiming it will not be hurt by the liberalisation of community pharmacies.

In recent months, Vickers and his colleagues have investigated door-to-door selling, estate agents, private dentists and employers' liability insurance.

The OFT is also investigating how well the supermarkets' code of practice protects their suppliers - a probe that could have major implications for the competition inquiry into the bids for Safeway.

Some in the Conservative Party have protested at the massive sharpening of the watchdog's teeth. But the message for companies is clear. Compete fairly or pay the price.