THE price of televisions, washing machines, and other electrical goods is set to fall after the Government yesterday ordered manufacturers to stop telling stores the price at which they should be sold and banned them from cutting supplies to those which offer discounts.
Mrs Margaret Beckett, President of the Board of Trade, said the move, which was welcomed by consumers' organisations, would mean more competition, leading to cheaper prices for shoppers.
The order also applies to video cassette recorders, hi-fi systems, camcorders, tumble driers, dishwashers, fridges, and freezers.
The action follows a report by the Monopolies and Mergers Commission (MMC) last year, calling for the scrapping of the Recommended Retail Price system.
Mrs Beckett said: ''I am determined that practices which restrict competition should be stopped.
''Retailers should be free to set their own prices and should not be refused supply because of their pricing. Consumers should not be denied the benefits of strong price competition.''
Suppliers will also be ordered to lay down their criteria for selecting which outlets to supply and will not be allowed to use pricing policies as a factor in their choice.
It will be illegal not to supply stores which meet the criteria and want supplies.
The order - which will come into force in September - also bans retailers from asking suppliers to cut off goods to rivals selling at discounted prices.
Mrs Beckett said: ''These remedies should ensure discount retailers can obtain supplies and all retailers have the freedom to sell goods at prices of their choosing.
''These are tough remedies but tough action is needed to remedy the problems identified by the MMC.''
Last year's MMC report found that retail prices for electrical goods were being inflated by ''widespread and entrenched practices'' among suppliers and dealers which meant consumers were getting a poor deal. It meant price competition was ''muted'', new retailers found it hard to get supplies, and innovative retailing was being discouraged.
Welcoming the Government's move, Mrs Deirdre Hutton, chairwoman of the Scottish Consumer Council, said: ''Consumers benefit from robust competition and if the DTI has found evidence that recommended retail prices stifle competition then we are extremely pleased they are taking this action.
''I hope it will lead to greater competition between the main High Street retailers and help people get better value for money when buying what are very expensive pieces of equipment.''
Mr Andrew Fisher, senior policy adviser at the Consumers' Association, said prices could fall by as much as 25%, especially for washing machines, which he said were often sold at inflated prices.
It could also spark the resurgence of warehouse shops selling goods at hugely discounted rates.
He said: ''It's an excellent move for the consumer. For the first time, there will be true competition on the high street.
''Prices will come down, I'm quite sure of that, because now shops will have to give shoppers a reason to buy from them rather than someone down the road.''
Meanwhile, Trade Minister Nigel Griffiths yesterday met representatives of leading consumer groups to plan improvements in the Government's consumer rights campaigns.
The meeting came as a new DTI report - Consumer Education and Awareness - revealed a lack of knowledge among consumers about how to get redress when they have a problem with the goods and services they buy.
q Supermarket giant Tesco is to spark a price war by selling thousands of television sets at knock-down prices in time for the World Cup. It has struck deals with two manufacturers to supply 24,000 TVs to hundreds of stores just a week before the month-long football tournament.
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