CBI's concerns over Competition Bill dismissed

The Government has rejected most of the criticisms levelled at its Competition Bill by the Confederation of British Industry by pressing ahead with sweeping new powers to clamp down on cartels. Michael Harrison reports.

The Bill, published yesterday and due to receive its second reading in Parliament on 30 October, will give the Office of Fair Trading powers to fine companies 10 per cent of their turnover, forcibly enter premises unannounced and remove documents from firms suspected of operating cartels.

In addition, the legislation will introduce a blanket ban on abuse of dominant market positions by large companies and give consumers new rights to pursue and obtain damages against companies engaging in anti-competitive behaviour.

The CBI had condemned the legislation as "extreme" and draconian, warning it gave the OFT powers only paralleled by those that Customs officers can use to bust drug gangs.

The employers organisation had urged the Government to limit fines to a maximum of pounds 1m, make the test of abuse of dominant position much more specific and redraft the legislation so that consumer bodies could not appeal against decisions reached by the OFT.

But the Bill, in its final published form, contains few of the modifications called for by the CBI. The powers of the OFT have been slightly modified to prevent it launching surprise dawn raids and removing original documents without a warrant issued by a magistrate.

The Bill also goes some way to avoiding the "double jeopardy" of firms having to seek approval for some business agreements from competition authorities in both Brussels and London.

However, the Bill contains none of the fundamental changes sought by the business community. Officials said that the director-general of Fair Trading, John Bridgeman, would have to issue detailed guidelines on how the system of fines would operate and how it would assess abuse of a dominant position.

But the DTI refused to water down the OFT's powers arguing that the legislation was designed to act as a deterrent.

Outlook, page 25

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