Chris Blackhurst: How many regulators does it take to run British business into the ground?

Midweek View: Reducing the level of scrutiny simply lowers the incentives for regulators to make sound decisions

At this time of year, everyone likes a good old quiz. So, hands up who can tell me how many regulators there are in the UK? The answer is 60, not including professional associations which govern their members, and inspectorates that assess official institutes and institutions. To think, it's not so long that we had virtually none at all. Then came the Thatcher privatisations and they began to grow rapidly in number. Back then, we were told they were likely to be only temporary – they were there to promote competition and once that had been achieved they would take a back seat or vanish completely. Today, Ofgem, Ofwat, Ofcom and the rest are still with us. They've been joined by others, so we now have 60 sets of officials to contend with.

Originally, too, we were told that by promoting competition they would bring down prices. That hasn't happened either – witness, politicians becoming exercised and wanting to intervene to curb price increases. It's not that the regulators have become soft: I was recently treated to a diatribe from a senior executive of one of our mobile phone networks against the level of interference his company had to endure from Ofcom. It's more that, having gone from a situation where the watchdogs were set up as an alternative to politicians, the latter, with one eye on a pending election, think the former are fair game: bloated bureaucracies that were meant to make consumers' bills cheaper, and have failed. So, Labour demands the abolition of Ofgem, and the Government has turned on Ofwat to reduce water bills.

The regulators don't like this one bit, oh no. They argue they were appointed to do a job and they should be free to do it without kowtowing to Westminster. Hmm. They need a reality check: the fact is that no self-respecting minister is going to let his or her regulator have a clear ride, especially when household bills are under such pressure.

However, there is one set of regulators that sail on regardless. These are the ones charged with boosting competition per se: the Competition Commission, formed out of the old Monopolies and Mergers Commission as was; and the Office of Fair Trading. Among the referees, the Competition Commission is king. It's the body that undertakes inquiries after the OFT has had a look; it's the one to which other regulators refer matters when they can't agree with the industries they oversee.

The trouble is, the Competition Commission has gone a bit nuts recently. Some of its decisions have caused eyebrows to shoot up, not just here but abroad. It blocked two NHS Foundation Trusts from merging, not because it was against the merger as such but because its chairman said he'd not been given enough evidence that it would deliver benefits. This prompted the NHS chief executive, Sir David Nicholson, to complain that NHS restructurings which make "perfect sense from the point of view of patients" are being held back because they could be seen as infringing competition between healthcare providers.

It's not just the NHS that has had cause to moan. Foreign governments are equally frustrated and perplexed. The Competition Commission blocked Akzo Nobel's attempted acquisition of Metlac, which the German authorities had approved. It ruled against Eurotunnel buying some cross-Channel ferries from the now defunct SeaFrance, even though the French had no objection. This row has prompted the French government to ask its national competition authority to take up the cudgels at Brussels and see whether the EU can be persuaded to make the different rules and procedures more consistent.

These are not the only causes for concern. In aggregates, we've seen one Competition Commission panel say one thing, only for another panel to demand further changes a few months later. While this approach would be frowned upon in many organisations, here it seems to be positively welcomed, with the Competition Commission delighting in the way its officials take different stances and appear not to talk to each other.

There are grumblings, too, that the Competition Commission's mind is made up before it starts, that it tackles an issue with a pre-set view and searches for evidence that corroborates that position. The Competition Commission points to its stakeholder surveys indicating "wide satisfaction" with its role. But in the most recent poll, nearly a quarter of respondents felt the Competition Commission sought to pre-judge outcomes, particularly where market inquiries are concerned.

In the Competition Commission's case, nobody is guarding the guardian: there is no real oversight of what it does. Once, ministers used to fulfil that role but not any more – they gave it up in favour of the judiciary being able to wade in. However, the legal oversight has been very limited. OFT decisions on cartels can be appealed on the merits; but for Competition Commission decisions, the Competition Appeals Tribunal can only determine whether the right procedures were followed: crucially, it cannot assess if the Competition Commission properly understood and acted upon the evidence.

So even when the Competition Appeals Tribunal finds against the Competition Commission, as it did on the Eurotunnel ferries purchase, it makes no difference since the Competition Appeals Tribunal can only re-order the case to be re-examined by the Competition Commission.

On the private healthcare inquiry, likely to be the Competition Commission's final report, the Competition Appeals Tribunal found it had been "unfair" and "irrational" in refusing to let hospital groups see the evidence upon which its finding was based (even on a confidential basis). That too, though, is unlikely to change anything: the Competition Commission is still intent on stripping the three main operators of many of their hospitals and forcing them to operate at a loss, regardless of the consequences. Given that a third of private hospital patients are NHS patients and the Government wants the private hospital sector to help the NHS this winter, this again shows a lack of joined-up thinking. But the Competition Commission is indifferent.

It's a shame to see the Competition Commission go out on such a low note – depressing even, given its proud history and that of its predecessor, the Monopolies and Mergers Commission. However, there is an opportunity to set matters right. In April, the Competition Commission and OFT will merge to form the Competition and Markets Authority. In the run-up, the Department for Business has been consulting on what level of judicial scrutiny should apply under the new regime.

Hitherto, the Competition Commission has argued there's no need for someone to inspect its decisions, since it is itself a second, review body (coming in after the OFT had a first probe), so only its procedures should be subject to judicial review, not its actual decisions . However, that will no longer wash when the OFT and Competition Commission become one.

As the Competition Appeals Tribunal has said, reducing the level of scrutiny simply "lowers the incentives for regulators to make sound decisions". Either the judiciary should have proper oversight, or ministers must keep tabs on what the new competition regulator is doing. Not being accountable or answerable to anyone just leads to bad decisions – as we've seen.

PROMOTED VIDEO
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Sport
Lionel Messi looks on at the end of the final
football
Extras
indybest
News
Richard Norris in GQ
mediaGQ features photo shoot with man who underwent full face transplant
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments