German cartel proposal opposed

Britain is fighting a rearguard action to block German plans for the creation of an independent cartel authority to vet mergers and takeovers throughout the European Union.

Germany has submitted proposals for such an authority, modelled closely on its own Bundeskartellamt, for inclusion in the Maastricht 2 treaty despite fierce opposition from both Britain and the European Commission.

The proposed authority would be independent of political control and would take over a large amount of the work carried out by the Brussels competition directorate, DG4, including the investigation of mergers, restrictive practices and abuse of dominant market positions.

So far, Germany has only the support of Italy with most other member states yet to take a position. The fear, however, is that the proposal could become a reality if Germany presses its case hard enough and other member states are indifferent.

The rulings of the authority could be challenged through the courts but they would not be subject to examination by the Council of Ministers, as the decisions of DG4's mergers task force are at present.

In Britain the plan is already being opposed by the Confederation of British Industry, the House of Lords select committee on the European Community and the Office of Fair Trading.

John Bridgeman, director-general of the OFT, said: "To treat competition law and cartels as something that is only the province of an independent body and the courts is a little dangerous. Parliament and ministers must be allowed to exercise authority and control. It is unrealistic to think competition issues can be kept free from political considerations because other interests have to be taken into account such as employment, cultural and defence considerations."

Karel van Miert, the EU Competition Commissioner, has also launched a withering attack on the German proposal. A background briefing document warns that the move to an independent cartel authority would uncouple competition matters from the rest of EU policy and weaken the promotion of the single market as a result.

He also warned that it would in effect mean the creation of two competition authorities since DG4 would still be responsible for state monopolies and state aid.