Government plans radical shake-up of competition body

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The Government is to shake up the Competition Commission by bringing in new talent to replace some of the longer-standing members of the new independent mergers regulator.

More than 20 new commissioners will be appointed over the autumn from the ranks of economists, lawyers, accountants and other experts with hands-on knowledge of competition issues to beef up the body that decides whether controversial mergers can go ahead.

Patricia Hewitt, the Trade and Industry Secretary, wants to overturn the old system of staffing the competition authorities from a pool of generalist civil servants and retired businesspeople.

It is not certain whether this will apply to the higher echelons of the commission, which is currently chaired by Derek Morris.

She plans to copy the "revolving door" policy used in the United States where top lawyers and economists do a stint on the Federal Trade Commission as a break from their lucrative careers but benefit from the prestige and inside knowledge that it is seen to give them.

The commission will be given a cash injection of several million pounds to boost its current budget of less than £9m a year. Pay levels will be increased to bring them closer to those in the private sector, rather than civil service salaries.

It is expected that about 14 of the current 34-strong commission will stand down by the end of the year. However, no commissioners will be forced out as that would run counter to the new spirit of independence.

The Government announced after the election that the commission would be given the power to decide on mergers rather than give recommendations to the Trade and Industry Secretary.

In exchange, the Government wants to see a massive improvement in the way the commission operates and to be ranked alongside the FTC in the US and the European Commission's merger authority. The Government believes this reform will be as crucial to its target of strong and stable economic growth in its second term as its decision to grant independence to the Bank of England.

Gordon Brown's decision to set up an independent Monetary Policy Committee to set interest rates has been seen by many as the prime achievement of Labour's first term.

Experts agreed that better competition regulation should boost growth. John Kay, an economist with competition experience, said: "It is a job that benefits from technical knowledge and experience, as these people can judge cases against similar situations and identify what the issues are.

"Having been a successful businessperson is not necessarily the best background for understanding the issues. It is not just a matter of common sense."

David Hull, the Brussels-based competition partner at Covington & Burling, an international law firm, said: "It strikes me that the UK reform is exactly what they need to do, because they need to take politicians out of the decision-making. It might just make the UK superior to the EU."

His colleague in Washington, Jim Atwood, said: "The experience that the people on the FTC have brings confidence to people like myself who have to deal with government officials."