Some of the most popular branded household products are being sold across leading supermarkets at a mark-up of as much as 125%, prompting allegations of price fixing.

Wholesale prices obtained by The Sunday Times reveal that customers are being overcharged for products including Lynx deodorant, Dove body wash, Duracell batteries and Gillette razors.

When confronted with the findings, one senior supermarket executive conceded that the prices were excessive but blamed multinational brands for demanding minimum selling prices. The suppliers deny any wrongdoing.

“We could sell these products more cheaply,” said the executive. “If we were setting the prices they would be significantly lower.” Despite the buying power of Britain’s top store chains, “in this instance the supermarkets don’t have the upper hand”.

The allegation provides an insight into why the Office of Fair Trading (OFT) has launched an inquiry into supermarket price fixing so soon after the sector received a clean bill of health following a Competition Commission investigation.

Suppliers are allowed to recommend supermarket prices, but it is unlawful to exploit market dominance to stipulate retail prices. The OFT is now investigating any pricing agreements between supermarkets and suppliers and whether they are legal.

The Sunday Times has found:

— Branded household goods are being sold at the supermarkets with gross profit margins of between 30% and 125%, compared with profit margins on food as low as 3%.

— The wholesale price for a packet of four Gillette Fusion razor blades is £3.52. They are being sold by Tesco, Asda and Sainsbury’s at exactly the same price: £7.96.

— Supermarket executives claim they are even being instructed by the multinationals about the times of year they can discount premium branded products.

— A retail buyer claims a Procter & Gamble representative suggested that he should keep profit margins high to avoid “crashing the market”.

The Competition Commission inquiry into the supermarket industry published last month found no evidence of price fixing. It concluded that customers were receiving the benefits of competition with “value, choice, innovation and convenience”.

The report did, however, uncover a series of e-mails between supermarkets and suppliers that showed how information on rivals’ prices was being shared. It said this might “raise issues of coordination”.

Those e-mails are likely to be of particular interest to the OFT, which is already probing allegations that Gallaher and Imperial Tobacco were involved with supermarkets in the unlawful coordination of cigarette prices. It is also investigating price fixing in the dairy industry; Sainsbury’s and Asda have already been fined after admitting collusion.

One of its biggest ever investigations now focuses on the prices of more than 100 branded goods, ranging from household products to soft drinks.

Trade prices obtained by The Sunday Times reveal the large profit margins. A bottle of the Unilever cleaning fluid Cif costs £1.47 wholesale but is sold at £2.10 by Tesco, a mark-up of 43%. A 2-litre bottle of orange Fanta costs 66p wholesale but is sold by Tesco at £1.45, a mark-up of 120%. Supermarkets will get even cheaper wholesale prices than those in the price lists obtained by The Sunday Times, so the gross profit margins will be even greater.

Supermarket executives are now ready to tell the OFT that in some cases the price of branded goods is being inflated because of the demands of suppliers for minimum pricing.

The senior source at one supermarket said representatives from Procter & Gamble and Unilever negotiated on what retail prices should be offered to the consumer.

“The message is that this is not supermarkets keeping margins high but the manufacturers calling the shots,” said the source.

The executive said the ultimate threat was that a product could be withdrawn, but the supplier might also sell its other brands on less favourable terms.

The OFT is also to examine retailers’ claims that multinationals only allow their premium branded products to be discounted with promotions at specific times of the year. One retail buyer said: “I had a meeting with Procter & Gamble and they said ‘You can have it at this price’ but wanted me to sell it at a much higher price.

“They were basically saying, ‘Don’t crash the market’.”

By maintaining a higher price in the supermarket, it makes it easier for the brands to charge smaller retailers higher wholesale prices.

Mitesh Soma, of the online company www.chemistdirect.co.uk said when he tried to sell a pregnancy test at a cheaper price than other outlets, the manufacturer withdrew supplies. He has now referred his complaint to the OFT.

Procter & Gamble said: “It is absolutely not P&G’s policy to ask sellers to sell items at certain prices.” It said it could advise on a recommended retail price but denied that it set prices. Unilever also said it had no involvement in setting retail prices.

Sainsbury’s said gross margins were not excessive and the company aimed to be competitive “across our product range”. Tesco and Asda said they both competed fiercely on price.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive