Populist champion Fingleton takes on vested interests

Supermarkets' referral follows decision to reopen inquiry into magazine distribution
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The Independent Online

He is just six months into his tenure as chief executive of the Office of Fair Trading but already John Fingleton is making quite a name for himself.

His resolve to overturn the decision taken by his predecessor that the supermarket industry did not merit a third £20m-plus investigation in six years prompted a mass choking-on-cornflakes moment for Britain's top food retail executives.

Yet he professes himself surprised by the reaction. "There is no rule that says an important sector that accounts for 50 per cent of all retail expenditure gets off for another 10 to 15 years just because it was last investigated in 2000," he said. (He doesn't count the more recent nine-month inquiry into the sector prompted by Wm Morrison's takeover of Safeway for some reason.)

"The supermarket sector has changed enormously [in the last six years]," he added. He cites the advance of Tesco and J Sainsbury into the convenience store sector for starters, and also notes the growing clamour about Britain's prescriptive planning regime, which supermarket groups believe is stifling their expansion. Indeed, planning issues lie at the heart of the inquiry, which was yesterday formally handed over to the Competition Commission.

It is early days, but Mr Fingleton has earned himself the mantle of something of a populist champion since taking the helm. Not only did he appear to champion corner shops by recommending a fresh investigation into the entire grocery sector - previous stabs have focused only on the biggest five - but he also delighted authors up and down the country when he asked the top competition arbiter to examine Waterstone's proposed takeover of Ottakar's.

One competition lawyer said of the 40-year-old: "He is applying a fresh set of eyes to the current caseload and trying to ensure a greater degree of rigour." The consequence has been to give issues popular with consumers another airing.

Mr Fingleton concurred: "We're looking after the consumer's interest." And on this issue he has some form. In his last role, as executive chairman of Ireland's Competition Authority, he argued for the repeal of the country's Grocery Orders, which fixed prices on certain foods but which he claimed cost consumers millions of euros because it blocked below-cost selling and kept prices too high.

"Very often government is heavily lobbied by vested interests. Consumers are under represented. It's important for agencies like us to point out the cost to consumers of certain government policies especially if they restrain competition," the fast-talking Irishman stressed. He is keen to take on the Government over highly regulated markets such as pharmacies, unhappy at "incumbency positions" where regulation protects people from competition. This may explain his decision not to refer the Boots merger with Alliance UniChem to the Competition Commission to the surprise of many, including Boots.

Like his predecessor, Sir John Vickers, Mr Fingleton has an academic background. For most of the 1990s he taught economics at Trinity College, Dublin. He has also held posts at London School of Economics, the Université Libre de Bruxelles and the University of Chicago.

Some competition lawyers wonder if he knows what he had taken on in the supermarket sector. Mike Pullen, head of the competition and trade team at DLA Piper, said: "It's a brave decision to go up against the supermarkets. This is a core issue for them so they will throw a hell of a lot of legal firepower at this. They will outgun the OFT because they have more money." Mr Pullen added: "Mr Fingleton may not be a barnstorming Elliott Spitzer-type but he's shown he's not frightened to take on the big brands."

Yet it is a moot point as to whether the OFT boss sees the inquiry in such black and white terms. He insists the investigation is not the David and Goliath battle between the convenience store sector and the Big Four grocers that many commentators see it as. "We've moved on from the convenience store agenda. There is very little succour for the Association of Convenience Stores [which appealed the OFT's previous decision not to investigate the sector - and won] in what we have said today. We are looking at what's stopping competition between the supermarket groups and much less at the original ACS complaint," Mr Fingleton said.

Next on his crowded agenda is the distribution of newspapers and magazines. The OFT is due to issue a fresh draft ruling after Mr Fingleton opted to junk an earlier decision that the distribution of magazines is anti-competitive. "The fact he has gone back over magazines and the UK supermarket sector shows a degree of determination to stand up for what he thinks is right rather than just stick with the legacy he inherited," one competition lawyer said.

It seems the drubbing the OFT received at the hands of the Commons Public Accounts Committee in January, which lambasted the body for being "meek", hit home with Mr Fingleton. With another four-and-a-half years in the post, he will have plenty more opportunities to show his mettle. Executives in other tightly controlled industries be warned!