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Government announces proposals to improve competition regime

16 March 2012

A new single competition authority to deliver better quality decisions and improved speed and predictability for business is being proposed by the UK Government in its response to the consultation on reform of the nation's competition regime.

The Competition and Markets Authority (CMA) will combine the Competition Commission and the competition functions of the Office of Fair Trading, with a primary duty in promoting effective competition in markets across the UK economy for the benefit of consumers.

Ministers expect this to deliver greater coherence in competition practice, more flexibility in deployment of resources, faster and less burdensome processes for business, and a centre of expertise providing leadership for sector regulators on competition enforcement.

Planned to be fully up and running by April 2014, the CMA will have the power to tackle market conditions that make it difficult for consumers to exercise choice, through further proposals to be published in the near future.

Further proposed changes to the competition framework include:

  • improving the speed and project management of the antitrust enforcement process, and the robustness of decision making, while addressing perceptions of confirmation bias;
  • strengthening and streamlining the markets and mergers regime, reducing statutory time limits for market investigations and introducing statutory time limits for mergers while making the undertakings process in relation to mergers more transparent;
  • strengthening the primacy of general competition law, so that the sector regulators are required to consider whether the use of their antitrust powers is more appropriate before using their sectoral powers to promote competition.

Impact

Announcing the proposals, Norman Lamb MP said: "The UK’s competition regime enjoys a strong reputation globally and our markets are rightly seen as open and fair. However, in any economy, anti-competitive practices and structures can develop which stifle innovation and growth, and which damage the interests of consumers."

He added: "The Government’s consultation highlighted some significant challenges to how the system in the UK works at present. One of the key issues is the length of time that is taken over cases. In particular, anti-trust enforcement takes too long, imposing very large costs and uncertainty on businesses.

"Taken together, the Government’s proposals will deliver benefits both for businesses and consumers. They will support quicker conclusion of cases and faster implementation of remedies where instances of anti-competitive behaviour occur. They will deliver an increased deterrent effect and greater clarity and certainty for business.

"In so doing, the proposals will impact positively on UK productivity and growth and contribute to the Government’s drive for more responsible capitalism."

Responding to the announcement, Katja Hall, CBI chief policy director, said: "There is clear evidence in key areas of the Government’s consultation response that it has listened to businesses’ need for competition reforms that deliver timely and predictable outcomes, and take a proportionate approach to intervention, when necessary.

“The decision to merge the OFT and Competition Commission is a positive first step in removing duplication and waste in the current process, which will importantly help free up business as well as Government resource.

She added that reassurance was needed that the explicit remit of the CMA would be to promote competitive markets in a way that enabled economic growth as well as benefiting consumers. "It is important that the CMA remains focused on economic issues and its power to investigate public interest issues should not be used to politicise the competition regime.

“We are also concerned that strengthened prosecution powers should only be used in cases where there is evidence of a genuine cartel and where there is a clear intent to fix prices.”

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