Competition Regulator in the UK to Strengthen Enforcement
December 5, 2005
In an important speech on 1 December outlining UK competition enforcement priorities, Philip Collins, Chairman of the UK competition authority known as the Office of Fair Trading (OFT), highlighted where the OFT will focus its resources and how these resources will be used. Businesses selling into or operating in the UK need to be aware of the changes, which are designed to make competition enforcement more efficient and effective.
On the focus of resources, the OFT will continue to concentrate on five priority areas—construction and housing, health care, mass market scams, credit products, and the interaction between Government and markets—whilst continuing to monitor other industry sectors for any anticompetitive conduct. In addition, to date, the majority of the OFT’s enforcement activity has been driven by competitor or customer complaints and by leniency applications in cartel cases. Now the OFT intends to develop its own investigative procedures and own-initiative cases.
On case management procedures, the OFT intends to improve the way in which it prioritises its workload, in particular by creating a Preliminary Investigations Unit (PIU) to manage cartels and mergers. The PIU will issue guidance on case allocation, which will take into account six prioritisation factors—consumer benefit, the strength of available evidence, the nature of the infringement, whether there any other special circumstances, the policy areas affected, and whether the OFT is best placed to handle the investigation (rather than the UK sectoral regulators or the European Commission).
The OFT intends to adopt strict timelines for the enforcement process. This will require respondents to cooperate fully with any investigations and meet any deadlines set by the OFT or face the possibility of enforcement action, which may result in criminal penalties. The OFT will also seek to enhance the transparency of the enforcement process by publishing timelines for future cases once the new case allocation procedure has been finalised and implemented.
In relation to merger control, the OFT has abandoned the confidential guidance procedure. This procedure offered companies the opportunity to approach the OFT, before a proposed merger was made public, to seek guidance on a confidential basis. This provided a conditional view on whether the transaction presented competition issues, and whether the transaction could be referred for a second stage, in-depth investigation to the UK Competition Commission once it was made public. This procedure will no longer be available.
The OFT is also encouraging more private antitrust enforcement. The OFT is reluctant to act as a middleman in competitor disputes which have resulted in little or no consumer harm. The OFT considers that its limited resources should not necessarily be used to tackle business-to-business disputes which may be better suited to private mediation or litigation. However, the OFT will continue to pursue actively cases where there is clear evidence of consumer detriment. The OFT is also considering ways to encourage more private enforcement and to improve the compensation available to those who have suffered harm as a result of anticompetitive conduct.
The OFT is under Government pressure, for example, from the National Audit Office, to make the enforcement process more efficient and effective. The new enforcement arrangements are likely to increase own-initiative investigations by the OFT, to increase pressure on businesses to respond quickly and fully with OFT investigations and to require businesses to be more proactive in seeking redress in competition disputes through litigation.
