EXECUTIVE SUMMARY

This White Paper sets out a blueprint to build a world-class competition regime for the UK. Vigorous competition between firms is the lifeblood of strong and effective markets. Competition helps consumers get a good deal, and drives innovation and productivity.

THE GOVERNMENT'S PRINCIPLES FOR COMPETITION POLICY

Since 1997, the Government has taken a series of steps to build a world-class competition regime in the UK. The Government's actions have been based on a clear set of principles, which also underpin the reforms in this White Paper:

• Competition decisions should be taken by strong, pro-active and independent competition authorities.
• The regime should root out all forms of anti-competitive behaviour.
• There should be a strong deterrent effect.
• Harmed parties should be able to get real redress.
• Government and the competition authorities should work for greater international consistency and co-operation.
• Competition policy deserves a high profile ­ because of its importance for economic performance.

The Government will publish a mission statement ­ setting out its objectives on competition policy, and what it promises to do to achieve them. This will help Parliament and others hold Government accountable for its actions.

STRONG, PROACTIVE AND INDEPENDENT COMPETITION AUTHORITIES

The Government, the Office of Fair Trading (OFT) and the Competition Commission, all share a common understanding of the aims of our competition regime ­ to increase the level of competition in the economy, to improve the UK's productivity performance and to make markets work well for consumers.

The Government wishes to see strong, independent competition authorities which work proactively to root out instances of anti-competitive behaviour:

• There will be clear legal duties for the OFT to promote competition.
• The Government invites our competition authorities to advise it on the impact of laws and regulations on competition. The Government commits itself to responding publicly within 90 days.
• The Government welcomes the OFT's move to introduce "super-complaints" from consumer groups. This new power for consumer groups will be enshrined in legislation.
• Only those with expertise relevant to competition will be appointed to the Competition Commission. Only those with expertise relevant to competition or consumer affairs will be appointed to the new Board of the OFT.
• Both the Competition Commission and the OFT will improve their staffing ­ with recruitment on the basis of expertise relevant to competition becoming the norm for those working on competition.
• The Government invites Parliament to actively scrutinise our competition regime. The mission statements of the Competition Commission, OFT and Government will help it to do so.

MODERNISING THE MERGER REGIME

The Government is committed to introducing a new merger regime:

• Final decisions will be taken by independent competition authorities, rather than Ministers.
• The test they will apply will be whether a merger results in a substantial lessening of competition rather than the current public interest test.
• Exceptionally, where competition considerations point the other way, it will be possible for the authorities to clear the merger or allow it to proceed with less stringent conditions where they believe it will bring overall consumer benefits.
• Ministers will continue to decide on the small minority of cases which raise defined exceptional public interest issues.
• There will also be procedural and other improvements, building greater transparency into the process.

INVESTIGATING MARKETS

The Government will reform the monopoly provisions ­ replacing them with a new power to investigate markets ­ where the overwhelming majority of decisions will be taken by independent competition authorities:

• The OFT will work proactively to keep markets under review ­ where it appears
• markets may not be working well, it will be able to refer them to the Competition Commission for further investigation.
• The Competition Commission will carry out a full investigation ­ assessing the market against a new competition-based test.
• The Competition Commission will itself determine what remedies are necessary. If appropriate, it will ask the OFT to negotiate undertakings on its behalf.
• Occasionally, even though there are adverse competition effects, the way a market operates may bring countervailing benefits to consumers. If this is the case, then the Competition Commission may decide to take no action or modify its remedies.
• Ministers will retain the power to decide the very small minority of cases where clearly defined exceptional public interest issues arise.
• There may be a case for Ministers retaining a limited role in relation to divestment remedies recommended by the Competition Commission.

A STRONG DETERRENT EFFECT

Hard-core cartels are highly damaging to consumers and to the economy in general. The Government believes that the current level of fines against those who engage in cartels does not provide an adequate deterrent.

There is a strong case for introducing criminal sanctions against individuals who engage in hard-core cartels:

• The new criminal offence would need to catch price-fixing, market-sharing and bid-rigging cartels.
• It should target individuals who set up and maintain cartels, and also senior executives or directors who either condone or encourage the arrangement.
• There would be real advantages for the main prosecuting authority to be the OFT.
• The Government intends that the OFT should be able to bring a criminal case against an individual whenever a cartel is implemented or intended to be implemented in the UK ­ this would include cases where the case against the firm is pursued by the European Commission.

REAL REDRESS FOR THIRD PARTIES

Private actions are a very important limb of an effective competition regime. Where behaviour is illegal under competition laws, parties who are harmed should be able to bring action against the perpetrators ­ getting the compensation they deserve.

• The Government proposes to widen the remit of the Competition Commission Appeal Tribunals enabling them to hear claims for damages brought by harmed parties.
• There will be a new right of appeal when seeking interim measures under the Competition Act to stop anti-competitive behaviour while a case is under consideration.
• The Government intends to repeal the exclusion of vertical agreements under the Competition Act.
• The Government believes that consumer groups should be able to bring actions for damages on behalf of consumers who have suffered harm as a result of anti-competitive behaviour.
• The OFT will be able to seek a court order disqualifying company directors where serious breaches of competition law have been found.

NEXT STEPS

The Government is committed to moving swiftly to implement this White Paper. Many changes do not require legislation and will be implemented over the coming months.

The forthcoming Enterprise Bill will implement those reforms requiring legislation. The Government invites views on the proposals in this White Paper to inform the process of drafting the Enterprise Bill. Comments should be received by 5 October 2001.

Consultation process

Contacting Us:

We would prefer to receive comments by e-mail. Such comments should be sent to:

competition.reform@dti.gov.uk

However, if you wish, you may instead post comments to:

Rachel Crisp Competition Reform White Paper Competition Policy Department of Trade and Industry 1 Victoria Street London SW1H 0ET Tel: 020 7215 0043

Confidentiality:

Your response to this White Paper may be made publicly available in whole or part at the Department's discretion. If you do not wish all or part of your response (including your identity) to be made public, you must state in the response which parts you wish us to keep confidential. Where confidentiality is not requested, responses may be made available to any enquirer, including enquirers outside the UK, or published by any means, including on the internet.