Vince Cable, Secretary of State for Business, Innovation and Skills has issued proposals to merge the competition and market investigation functions of the two main UK competition bodies: the Competition Commission ('CC') and Office of Fair Trading ('OFT'). The aim is to have a new streamlined single tier expert competition and markets authority, which should deliver faster and more consistent results.
The new authority will investigate mergers, cartels and other anti-competitive practices (such as abuses of a dominant position and restrictive agreements). It will also retain the function of independent market investigation and analysis, which cuts across the consumer and competition spheres.
Under the current regime, the OFT, as the first-phase investigative body, reviews mergers and markets before referring them to the CC in the event that an in-depth second-phase investigation is required. Concerns have been raised for some time that having two separate bodies introduces unnecessary costs and delay into the process. Advocates of a single agency system have pointed to other competition authorities, such as the European Commission, which handle both first and second-phase merger investigations. On the other hand, there are merits in having a two tier system, where a 'clean' phase II case team takes over a merger or market investigation, which allows for a fresh look at the evidence and avoids views becoming entrenched at an early stage.
A full consultation on the detailed options for creating this new authority is to be held in early 2011. With much of the detail yet to be decided, the exact structure of and procedures for the new regime are not yet clear. Ensuring appropriate checks and balances are built into the system whilst still achieving efficiencies is likely to be a key issue for discussion. In the meantime, the increasing cooperation between the CC and OFT (with for example the recent publication of the joint CC and OFT substantive merger guidelines) is likely to continue.
It was further announced that the specialist Competition Appeal Tribunal is to remain, although its support functions may be transferred to the more general Tribunal Service. The economic regulators which have concurrent competition enforcement powers (Ofgem, Ofwat, CAA, ORR and Ofcom) are also to be retained (although the exact roles of both Ofgem and Ofwat are currently under review). Postcomm, the postal services regulator, is to be merged with Ofcom.
The OFT's consumer enforcement powers are to be taken over by Trading Standards, with the Citizens Advice service taking on the OFT's consumer advocacy role.
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