Carsberg warns he may extend price-capping

Sir Bryan Carsberg, the new Director-General of Fair Trading, warned yesterday that he might extend the use of price-capping in cases where companies faced little or no competition.

In his first speech since taking over the post, the former head of Oftel, the telecommunications watchdog, also indicated that he would take a more pro-active role in investigating markets dominated by a few firms.

He said he would clamp down in cases where manufacturers tried to stifle competition by limiting the number of retailers able to sell their products.

Sir Bryan stressed that competition would remain his prime concern. This has been the main plank of mergers and takeover policy since 1979.

However, the three-pronged strategy for tackling anti-competitive practices and abuses of the market outlined yesterday marks a distinct shift in the approach the OFT is likely to take since Sir Bryan took over from Sir Gordon Borrie in July.

Price-capping has been widely used to regulate privatised monopolies such as BT and British Gas.

Sir Bryan's last act at Oftel was to set a tough new four-year price control formula for BT.

Since 1970 the Monopolies and Mergers Commission has recommended direct controls on prices in only seven cases - including sales of Librium and Valium, white salt and condoms.

However, speaking at the 11th International Trust Conference in Cambridge, Sir Bryan said: 'Perhaps the evidence suggests that a more radical approach is needed and that lessons from the successes of the regulation of privatised utilities may be relevant for more general kinds of monopoly references investigated by the MMC.'

Where it was difficult or impossible to get competition into a market price, capping or divestment should be considered, he added.

Sir Bryan's determination to intervene in markets where barriers to entry are high has already been demonstrated with his decision to refer newspaper distribution to the MMC.

'I regard it as a serious constraint on a market to say that a product may be sold only by people who are selling it already and that nobody can try their ability in seeking to displace one of those,' he said.

Sir Bryan said he would not rely entirely on receiving complaints before launching investigations. It was particularly important to investigate markets dominated by one large company, a duopoly or a handful of firms.