A Competition Regime for Growth: a Consultation on Options for Reform
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A COMPETITION REGIME FOR GROWTH: A CONSULTATION ON OPTIONS FOR REFORM MARCH 2011 Explanation of the wider context for the consultation and what it seeks to achieve The Government’s overarching objective in reforming the UK’s, already world class, competition regime is to maximise the ability of the competition authorities to secure vibrant, competitive markets, in the interests of consumers and to promote productivity, innovation and economic growth. The Government is therefore consulting on changes to: o improve the robustness of decisions and strengthen the regime – enhancing the regime’s ability to resolve and deter the competition restrictions that do most harm to competition, consumers and to economic growth o support the competition authorities in taking forward high impact cases - developing the regime’s ability to target the competition restrictions that do most harm to competition, consumers and to economic growth, and providing the regime with the tools and flexibility to make proportionate and focused interventions o improve speed and predictability for business – building on the regime’s ability to take the timely, proportionate and predictable actions that limit burdens on business and that provide for the certainty that enables business to invest and innovate with confidence In this connection, the Government is consulting on a proposal to merge the competition functions of the Office of Fair Trading and the Competition Commission to create a single Competition and Markets Authority which can play a leading role in achieving the overarching objectives and delivering the desired outcomes. Issued Date: 16 March 2011 Respond by Date: 13 June 2011 Enquiries to Duncan Lawson Department for Business Innovation and Skills 3rd Floor, Orchard 2 1 Victoria Street Westminster London SW1H 0ET Tel: 0207 215 5465 E-mail: [email protected] Fax: 0207 215 0480 This consultation is relevant to: Businesses of all size, economic regulatory bodies, consumer organizations, legal bodies, economic consultants and academics. 2 Contents Foreword from the Secretary of State Executive Summary How to Respond Chapters: 1. Why Reform the Competition Regime? 2. The UK Competition Regime and the European Context 3. A Stronger Markets Regime 4. A Stronger Merger Regime 5. A Stronger Antitrust Regime 6. The Criminal Cartel Offence 7. Concurrency and Sector Regulators 8. Regulatory Appeals and other Functions of the OFT and CC 9. Scope, Objectives and Governance 10. Decision Making 11. Merger Fees and Cost Recovery 12. Overseas Information Gateway Appendices 1. The UK Competition Framework 2. Statistics on Competition Cases 3. International Comparisons of Merger Regimes 4. A list of those organisations and individuals consulted 5. Code of Practice on Consultation Consultation Questions 3 Foreword Competition is one of the great drivers of growth, keeping prices low for consumers and encouraging innovation, enterprise and investment. On 29 November 2010, the Chancellor and I announced the Growth Review, ‘The path to strong, sustainable and balanced growth’ as the first part of the Government’s strategy to create the best conditions for future economic prosperity. This consultation on the competition framework is a fundamental part of the Government’s growth agenda. The UK’s competition regime is internationally regarded as one of the best in the world. Nevertheless, I believe it can and should be even better. The proposals I set out for consultation are designed to deliver better outcomes for consumers, to help tackle barriers to entry, to give small business a new route to shine a light on market features that do them harm and to increase business confidence in the predictability of competition decisions. I am also seeking views on whether the competition functions of the OFT should be merged with the Competition Commission. I believe one, powerful Competition and Markets Authority would ensure a more dynamic and flexible use of competition tools and resource, would create a single advocate for competition in the UK and internationally, would reduce delay and end duplication for business. This consultation is about reforms to the public authority regime for competition. I am also keen to promote private sector-led challenges to anti- competitive behaviour and will bring forward separate proposals on this in due course. In deciding the way forward, I am mindful of the need to preserve the best features of the current regime and to ensure transparency and independence of decision making. Alongside this consultation, the Government is also launching a consultation on the Consumer Protection Regime ‘A consultation on institutional changes for the provision of consumer information, advice, education, advocacy and enforcement’, which will consider how a new competition and consumer landscape will work together to deliver benefits to consumers and to businesses. Rt. Hon. Dr. Vince Cable MP Secretary of State for Business, Innovation and Skills and President of the Board of Trade 4 Executive summary Competitive markets drive productivity and growth, and an effective competition regime is central to providing them. The current UK competition regime is world-leading, but there is still scope for improvement. The Government intends to make this system even better. The Government’s overarching objective in reforming the regime is to maximise the ability of the competition authorities to secure vibrant, competitive markets that work in the interests of consumers and to promote productivity, innovation and economic growth. To achieve the Government’s overarching objective, it is therefore consulting on change to: • improve the robustness of decisions and strengthen the regime – enhancing the regime’s ability to resolve and deter the competition restrictions that do most harm to competition, consumers and to economic growth, while ensuring that the regime retains the flexibility to strengthen its processes as the regime and economy evolve; • support the competition authorities in taking forward high impact cases - developing the regime’s ability to target the competition restrictions that do most harm to competition, consumers and to economic growth, and providing the regime with the tools and flexibility to make proportionate and focused interventions; • improve speed and predictability for business – building on the regime’s ability to take the timely, proportionate and predictable actions that limit burdens on business and that provide for the certainty that enables business to invest and innovate with confidence. The Government will build on the successes of our world class competition regime, maximising its ability to sustain and develop its valuable contribution to competition, consumers and economic growth. In determining which reforms should ultimately be adopted, the Government will therefore focus on those reforms which can deliver benefits to competition, consumers and economic growth, and which can be implemented as soon as possible and without significant uncertainty and risks to the momentum and effectiveness of the regime. In this connection, the Government is consulting on a proposal to merge the competition functions of the Office of Fair Trading and the Competition Commission to create a single Competition and Markets Authority (CMA), which can play a leading role in achieving the overarching objectives and delivering the desired outcomes. Key arguments for the single CMA are to ensure the flexible allocation of scarce public resource to competition issues as they emerge, and for it to be a stronger advocate for pro-competition policy across government, including in the delivery of public services. Proposals for consultation include: Improving the robustness of decisions and strengthening the regime • considering ways to improve the voluntary merger notification scheme and the alternative of the mandatory pre-notification of mergers; • ways to strengthen the operation of concurrent competition powers, including joint working between the CMA and sector regulators on competition cases; • reforming the dishonesty requirement of the criminal cartel offence to make it easier to secure convictions in serious cases; • achieving the right governance and decision-making structures for the CMA. Supporting the competition authority in taking forward high impact cases • enabling the CMA to carry out investigations into similar practices across different markets; • considering whether statutory objectives should underpin the competition focus of the CMA or whether the CMA should have a statutory duty to keep key sectors under review; • strengthening the voice of small business by extending the super- complaint powers to SME bodies. Improving the speed and predictability for business • introducing more (and tighter) statutory deadlines in merger and market cases, coupled with appropriate information powers; • introducing an exemption for small businesses from merger control; • streamlining the handling of antitrust cases. 6 Ministers’ relationship with the competition regime The proposals set out in this consultation maintain the strong competition focus and ultimate independence of the UK’s competition regime. They do not, for example, extend Ministers’ involvement in the processes of referral of mergers or markets for investigation, decision-making on competition remedies, or in public interest considerations. The Government is consulting on whether, in market investigations, the proposed single CMA could report on specified public interest considerations