Carsberg seeks tougher line on competiton

Sir Bryan Carsberg, the Director General of Fair Trading, yesterday launched a blistering attack on Britain's approach to competition policy.

He called for the introduction of legal prohibition of anti-competitive practices and strong financial penalties for companies that breach the rules, including the utilities.

Speaking before the Trade and Industry Select Committee, Sir Bryan also said that Britain should have a single competition authority, scrapping the present system which uses the Office of Fair Trading and Monopolies and Mergers Commission, followed by a final decision by the Department of Trade and Industry.

"I would favour the establishment of a unitary competition authority for the UK, headed by a small group of full-time commissioners, with procedural safeguards to separate investigatory and adjudicatory functions," he said.

Under a "prohibition" system, this authority would have powers to investigate cases, grant or refuse clearances or exemptions, implement remedies and impose fines, subject to appeal in the courts, Sir Bryan said.

The European Union had "draconian fines" of up to 10 per cent of worldwide turnover for companies that fell foul of the rules. "I would be looking for fines strong enough to act as a real deterrent but not strong enough to break a company."

Sir Bryan said that these penalties should also apply to utilities that indulged in cross-subsidy, priced outside their regulatory limits or in some way acted to hinder the development of competition.

At present utilities that breach the regulatory rules in their industry face no penalty first time round. He believes the tougher approach of prohibiting certain types of behaviour should improve behaviour in industries including telecommunications, gas, electricity, water, and railways.

In industry in general, Britain's competition approach was "administrative", prohibiting nothing at first but perhaps investigating and prohibiting afterwards. Sir Bryan said:"People really have nothing to lose by breaking the rules and behaving anti-competitively."

He also attacked the present system under which ministers have the final say on implementation of MMC reports " because most of the issues are not political".

He said that, while he had every reason to think that ministers continued to favour strong competition policy, "there has been a run of decisions which are to some extent a disappointment to me".

The statement from Sir Bryan, due to leave the MMC in May, is his strongest yet on the shortcomings of the system.

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