Consumers

This comes from a 2009 Parliamentary report after the banking crisis but may be apposite: “We are particularly concerned that fragmented and dispersed ownership combined with the costs of detailed engagement with firms by shareholders has resulted in the phenomenon of 'ownerless corporations' described to us by Lord Myners. …..Too often, eminent and highly-regarded individuals failed to act as an effective check on, and challenge to, executive managers, instead operating as members of a 'cosy club'.”

Connections
I am not necessarily against trustees who for one reason or another may know existing staff, elected Directors or co-opted Directors. By their seniority one probably gains very competent people however they are also not typical of the general public and may view things differently from perhaps people from other professions or callings.

However when we also have the situation where the existing Trustees define the sought for proficiencies that they say are required for new Trustees and then select who can be candidates for election this does seem beyond what is reasonable.

For Which? Ltd and the Consumers' Assocaition the Directors and Trustees effectively are the controllers of the charity and whereas the Trustees once were a Management committee it seems that the power has gone to the Which? Ltd Board and indeed in 20013/14 the Consumers Association Trustees met only four times. Given the links between the two I will consider them together. It should be noted that the Chairman of the Consumers Association and the CEO are normally the only ones who attend meetings of both Boards and therfore have great input.

Connections -

1. Mike Clasper, the Chairman of Which? Ltd [ and of the Guiness Peat Group] previously worked for a long time for Proctor & Gamble where Which? CEO Peter Vicary-Smith also started his career. Mike Clasper also worked as head of BAA and of HMRC and as co-opted Directors/Trustees we have Tony Ward formerly at  BAA, and Melanie Dawes at HMRC. Prior to that Gabs Malouf also from the HMRC was co-opted 2007 -2010 to both the Which Ltd Board and to the Consumers' Association

2. Both Mark Addison and Anna Walker worked as Director Generals at Defra in 2001 -2004 and one would therefore think that they would know of each other as there are few Director Generals. According to Professor Barwise the advent of Anna Walker was via head-hunters and no one on the Board knew her.

3. Then there is the soap connection where several members have worked for Unilever in very senior positions. Currently Paul Preston, and immediately before him Neil Cameron. Another member who has at one time or another worked for Unilever is Andrew Mullins 1986-95. Whilst one might feel happy that that P & G and Unilever might balance each other out the fact remains that they are only one sector of all of British industry.

Also rather sadly the EU fined both companies quite heavily for colluding on pricing and market share against consumerd for the period 2002-2005, discovered in 2008 and judged in 2011. Not really a great recommendation for the companies. Obviously I am in no way suggesting any of our Directors/Trustees was in the slightest way involved.

There is also the potential connection of our Chairman Professor Barwise to the consumer industry as his online CV states he is an expert witness appearing in many cities mainly for consumer product companies. The only recorded mention I can find is from 1995 where in an EU merger case he was probably representing P & G or possibly SCA/PWA.

Also from Professor Barwise's CV it shows he became a "Founding investor and advisory Board member,  Verve { online brand communities] 5. 09"  This was later picked up by the auditors as there was at the time a restriction on Trustees having more than 1% of the shares of a company doing business with the Consumers' Assocaition. Verve do the surveys for Which? using the Connect band of subcribers of which I was an early joiner in early 2011.

The restriction has now been increased by a Resolution passed by shareholders so that Trustees can own up to 5% of a company doing business with the charity. I have to admit to being uncomfortable with any shareholdings particularly if it has the Chairman as the beneficiary.

most of the information is here:

http://www.which.co.uk/about-which/who-we-are/whos-who-at-which/which-limited-board/

http://www.which.co.uk/about-which/who-we-are/whos-who-at-which/the-which-council/

http://www.theguardian.com/business/2011/apr/13/unilever-procter-and-gamble-price-fixing-european-commission

http://faculty.london.edu/pbarwise/assets/documents/CV_1_12.pdf

http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1419276050574&uri=CELEX:31996D0435

as the last is not easy to find and lengthy here are the paragraphs

EU 1995

(170) London Economics in their study prepared for the parties gives the impression of the UK toilet-tissue market being a commodity type of market, where brands and advertising are not important factors. The study argues that toilet-tissue is a short-term experience good with low switching costs where the quality of the product is known immediately after use. According to London Economics such products normally exhibit low brand loyalty. Particularly, the study concludes that private labels constrain the pricing of branded products because:

- 'manufacturer brands and own brands are regarded by many consumers as substitutes;

- switching costs are very low in the toilet-tissue market

and

- competition takes places mainly in terms of price. Advertising is often used to support this form of competition,

- advertising does not represent a significant barrier to entry into this market. This is especially true for a potential branded supplier such as Procter & Gamble or SCA/PWA

and

- due to the vigorous nature of competition between UK retailers, shelf space is not a significant barrier to entry. This is because consumers attach value to the choice as well as to price and quality, of products that the retailer stocks. Retailers will always do better by stocking a wider range of successful products.` (London Economics, pp. 26 and following).

(171) Professor Barwise in his paper prepared for a major competitor reaches four main quite different conclusions:

- 'First, brands are important in UK tissue markets: innovation and pricing are led by brands with private-label products playing a secondary role. The leading brands attract strong brand loyalty and command a high price premium.

- Second, there are only two important UK tissue brands, Kleenex and Andrex. These two brands compete directly. Other UK brands are poorly advertised and exhibit weak brand loyalty.

- Third, given the strength of Andrex and Kleenex, a successful new entry from a rival brand would be difficult, expensive and a particularly risky investment.

- Fourth, any company that controlled both Andrex and Kleenex would have considerable scope to raise prices and to engage in strategic conduct designed to exclude rival brands and potential new private-label suppliers.` (Barwise, p. 2)