Ofgas seeks new powers to promote competition

Ofgas, the gas industry watchdog, is to seek unprecedented powers to clamp down on any anti-competitive behaviour by British Gas, writes Mary Fagan. The regulator wants to include provisions in the company's licence that would allow it to ban suspect activity immediately rather than having to wait until after an investigation, which can take more than a year.

It is understood that draft provisions for inclusion in the British Gas licence have been drawn up but not yet presented to ministers. Ofgas declined to comment.

According to one of the independent gas companies: ''Ofgas is trying to define more clearly what a dominant player may or may not do. It could over time become a different dominant player - such as a regional electricity company which became strong in its own area.''

British Gas's rivals are thought to have complained to Ofgas and to the Government that the regulator's existing powers do not go far enough. They argue that companies can go out of business while a lengthy investigation into British Gas is underway, with no retrospective redress.

If the new powers get the go-ahead, they could have ramifications throughout British industry. The move will infuriate British Gas, which already believes that its regulator will in future have too much discretion over the working of the marketplace.

It comes as the company braces itself for competition in the domestic gas market, to be phased in from next year with the market opening fully in 1998.

The Ofgas proposals will increase pressure on the Government to overhaul competition policy for industry as a whole.

Sir Bryan Carsberg, until recently the director general of the Office of Fair Trading, called for a "prohibition" approach to restrictive agreements and anti-competitive behaviour - prohibiting any such practices and introducing hefty penalties for those who fall foul of the rules.

Under the present system in the UK, nothing is prohibited but "questionable" behaviour can be investigated and subsequently prohibited. Sir Bryan said that gives no incentive to avoid anti-competitive behaviour in the first place.

Earlier this year Oftel, the telecommunications regulator, said it would clamp down on anti-competitive behaviour and may seek wider powers to prevent abuse of dominant market position by BT or any other company. Don Cruickshank, director-general of Oftel, said companies hurt by anti- competitive behaviour have to wait too long for action and redress.

There has been pressure from Mercury and other telephony companies for the introduction of immediate sanctions - including fines to be imposed if a company abuses its market power.Ofgas' plans for change are proceeding in parallel with the passage of the Gas Bill paving the way for domestic competition.