Enterprise and Regulatory Reform Bill

Lord Currie of Marylebone Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord Currie of Marylebone]

My Lords, I declare an interest as the chairman designate of the Competition and Markets Authority which the Bill proposes should replace the existing Office of Fair Trading and the Competition Commission. I shall therefore focus on Parts 3 and 4, which establish the new authority and make some important changes to the competition and consumer regime that it will oversee. Without appearing presumptuous, I hope that noble Lords will allow me to speak of the new authority on the assumption that its creation comes about and that the Bill passes and receives Royal Assent.

I knew when I took on this role just what a privilege and responsibility it represents. Few people have the opportunity to create a new organisation, and I have been given that privilege twice, first as the founding chairman of Ofcom and now, exactly 10 years later, as the founding chairman of the new authority. I am conscious that I follow in the footsteps of many distinguished economists, lawyers and competition experts who have led the Office of Fair Trading and the Competition Commission in the past, including the noble Lord, Lord Borrie, who has already spoken in this debate. The responsibility is considerable. The Office of Fair Trading and the Competition Commission have strong reputations as effective competition authorities, both here and internationally. I have always known them as bodies that have attracted highly professional and dedicated staff; and that view has been confirmed by my many meetings at all levels of the two organisations over the past couple of months.

The early processes for building the new authority are necessarily under way—the search for the new CEO designate; the formation of a transition team drawn from BIS, the Office of Fair Trading and the Competition Commission; and the clarification of the legal basis on which the transfer of staff will happen. There is a great deal to be managed over the next year or so before the authority comes into existence. We need to make sure that the Competition and Markets Authority is established as a vibrant organisation with a fresh, dynamic culture that embodies both new elements and the best of the two legacy bodies and retains and integrates the talent of their staff. In contrast to many public sector mergers in the past, we have adequate time to manage this process and its complexity, and get it right.

Three high-level objectives will be paramount. First, we will ensure that the new body is a high-performance organisation that is at least as effective as, if not more so than, the two organisations that it replaces. That is a high ambition, but entirely achievable. Secondly, we will ensure that the casework of both the Office of Fair Trading and the Competition Commission continues unimpeded and that the transition of work in progress to the new authority is entirely seamless. We will safeguard business as usual. We need to find ways of enabling colleagues in the Office of Fair Trading and the Competition Commission to engage with the complex transition process, while not distracting them from their current roles. Thirdly, we will ensure that all colleagues are treated fairly and appropriately in the transition. We have established the legal principles for that transfer under an arrangement equivalent to TUPE. Not all staff will transfer to the new authority, but I expect that all but a handful of positions in it will be filled from the existing bodies, and at this point we envisage rather few redeployments or redundancies.

Despite these reassurances, it is a long and unsettling period of transition for staff, and we will need to work hard to communicate effectively through the processes to keep uncertainty to the minimum. There will be real benefits from the creation of the CMA. The combined organisation will be able to deploy resources more effectively and flexibly to different parts of its work, including phase 1 and phase 2 merger and markets decisions. It will deliver decisions in a more timely way, with no diminution of quality, to the benefit of consumers and businesses. It will provide a single and, therefore, stronger voice and advocacy, both at home and internationally on competition issues. With the right work environment, it will provide for its staff a wider range of work opportunities and experience.

I recognise the question that the noble Lord, Lord Borrie, has raised: how does one maintain the independence of the phase 1 and phase 2 processes while delivering those decisions in a more timely and efficient way? I believe that, with the redesign of the processes under a single roof, and while maintaining independence, we will achieve both timeliness and greater efficiency.

I am sure we shall debate the measure in the Bill to remove the dishonesty test in cartel cases. It is the single most important reason why the Office of Fair Trading has been unable to bring more cases to trial. Cartels represent a major barrier to dynamic, innovative markets and economic growth, and the change is greatly to be welcomed.

The new authority will have an important interface with the sector regulators in financial services, communications, energy, water, transport and, of growing importance, public markets such as health and education. In most of these sectors, competition and Enterprise Act powers are held concurrently by the sector regulators and the Office of Fair Trading, and in future the Competition and Markets Authority. Some have been critical of the sector regulators for using sectoral regulatory powers rather than competition powers, and the Office of Fair Trading has held back from exercising its competition powers. This has led some to call for the sector regulators to be stripped of their competition powers. I think there are better options, not least those laid out in the Bill. Removing concurrency could induce the sector regulators to use their sector-specific powers more, not less, which would be entirely counter-productive. It could also force the Competition and Markets Authority to build sectoral expertise that would be duplicative and wasteful. It may well be better to try what is envisaged in the Bill: enhanced co-operation, led by the authority, drawing on the sectoral expertise of the regulators and the competition expertise of the authority. Steps are already underway to put in place new mechanisms for that co-operation. We should be clear that if this co-operation does not work, the authority must be willing and able to exercise its powers in those sectors if regulators have not.

A number of other measures in the Bill, which I do not have time to discuss, will give rise to a much enhanced competition regime with a more dynamic authority with wider powers to deploy, but the Competition and Markets Authority will be more than a competition authority. It also has the important and complementary role of consumer protection. Consumer protection and competition law work together: effective competition empowers consumers; and well-informed and protected consumers make competition more effective.

As has been discussed, the Bill brings about a shift in the landscape for consumer protection and enforcement. Trading standards, under the National Trading Standards Board, will play a bigger role in the enforcement of consumer law, with the co-operation of the Competition and Markets Authority. The authority will have a broad range of consumer enforcement powers, and it will have primary expertise and responsibility for the enforcement of unfair contract terms legislation, taking responsibility for high profile national cases, such as surcharges that stem from misleading advertising prices as well as international cases. Mechanisms are being put in place to ensure enhanced co-operation between all the bodies involved, which include trading standards, Citizens Advice, the Competition and Markets Authority and the new Financial Conduct Authority, to make sure that they share intelligence on consumer detriment and allocate enforcement action. This will be a critical area of the new authority’s work and, as an early signal of its importance, I have already engaged with trading standards at both a national and local level.

Effective competition and vibrant markets play a crucial role in promoting the investment, innovation and growth that we need in these difficult times. Together with a high performance Competition and Markets Authority, this will maintain and enhance a world-class and robust competition and consumer framework that benefits businesses and consumers and promotes economic growth. Faster decision-making, a lower burden on business, and the better deployment of expert resources will all work to this end.