Competition Regime Reform

Norman Lamb Excerpts

Thursday 15th March 2012 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)]

I am pleased to announce publication later this morning of “Growth, Competition and the Competition Regime: Government Response to Consultation” which will detail the Government’s proposals for reform.

The Proposals

The UK competition regime is highly regarded internationally, but the Government believe that there is scope to improve the effectiveness of competition enforcement and streamline processes. The Government’s policy objectives for reform are to:

Improve the quality of decisions and strengthen the regime.

Support the competition authorities in taking forward the right cases.

Improve speed and predictability for business.

One of the Government’s key proposals is to create a single Competition and Markets Authority (CMA) by transferring the functions of the Competition Commission and the competition functions of the Office of Fair Trading to it. The Government have decided to give the new authority a primary duty to reflect the role the Government see for it in promoting effective competition in markets across the UK economy for the benefit of consumers.

The benefits of this will include:

Greater coherence in competition practice and a more streamlined approach in decision making, through strong oversight of the end-to-end case management process.

More flexibility in resource utilisation to address the most important competition problems of the day and better incentives to use anti-trust and markets tools to deal with competition problems.

Faster, less burdensome processes for business.

A single strong centre of competition expertise, which can provide leadership for the sector regulators on competition enforcement and a single authoritative voice for the UK internationally.

Increased accountability and transparency.

Additionally, the Government recognise and value the close relationship between competition problems and consumer activities in this context. The CMA will therefore have the power to tackle market conditions that make it difficult for consumers to exercise choice in an otherwise competitive market. The full scope of the CMA’s consumer functions will be set out when BIS publishes proposals for reform of the consumer landscape in the near future.

We aim to have the single CMA fully up and running by April 2014.

In addition to the creation of the CMA, the Government are proposing changes to the competition framework. Proposed changes include:

Embedding an enhanced administrative approach to antitrust enforcement, involving improvements to the speed of the process and project management, and the robustness of decision making, while addressing perceptions of confirmation bias.

Strengthening and streamlining the markets and mergers regime by, for example, reducing statutory time limits for market investigations from 24 months to 18 months and, for mergers, introducing statutory time limits and amending the process for undertakings in lieu (UIL) to make it 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.

The full list of proposals can be found in the consultation document copies of which will be placed in the Libraries of both Houses.

Rationale

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. Where well-functioning competition exists companies have to become more efficient and innovative and find ways to offer consumers better quality and better value products and services.

Where anti-competitive behaviour exists, timely and effective enforcement is essential to identify and tackle it efficiently and to limit the detrimental effects that consumers may suffer as a result. 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.