It has long been known that on the whole the price of new cars in the UK is higher than
their equivalent in other parts of Europe (see e.g. Worthington and Britton (2003),
p. 409). Price comparisons compiled by the European Commission in November 1999,
for example, indicated that on certain models, UK manufacturers’ list prices could be
between 40 per cent and 60 per cent higher than in the cheapest EU country. Inevitably,
claims that UK consumers were being overcharged led to an investigation by the UK
competition authorities which was asked to examine the relationship between car
makers and their exclusive dealerships. For many observers