Bridgeman warns against monopolies

John Bridgeman, the director general of fair trading, yesterday delivered his clearest warning that he would not permit the creation of national champions if it hampered competition in domestic markets.

His comments were seen as a warning shot across the bows of British Airways, which seeks approval for its alliance with American Airlines, and Bass, which proposes to take over Carlsberg Tetley to create Britain's biggest brewing group.

Speaking at a conference at Keele University, Mr Bridgeman dismissed the argument that Britain needed to create strong monopolistic businesses at home to compete in international markets.

"Firms which are subject to vigorous competition in their domestic markets are far more likely to be effective competitors abroad than those which are not subject to such pressures," he said. "The benefits of competition are indeed wider than the benefits of low prices and high-quality goods.

"Effective competition also provides the main stimulus for innovation, technological or otherwise, and provides the most powerful and enduring basis for the international competitiveness of UK firms.

"Equally, firms which are subject to competitive pressures are most likely to seek to gain competitive advantage through product or process innovation or through the development of new products."

He said that firms which did not face competition were under no pressure to cut prices, improve quality and service or innovate: "A strong competition policy aimed at maintaining domestic rivalry... is one of the pillars on which our economic future depends."

Three months ago, the President of the Board of Trade, Ian Lang, warned he would not tolerate national champions if they undermined competition at home.