Regulator zeroes in on booksellers

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The Independent Online
BRITAIN'S small bookshops could find themselves the victims of a bitter feud over long-overdue reforms of restrictive practices law.

Sir Bryan Carsberg, Director-General of Fair Trading, is making no secret of his fury that restrictive practices have again been omitted from the Queen's Speech - nearly four and a half years since the planned reforms had been published in a White Paper, when Lord Young was trade and industry secretary.

When he announced that he was going to re-examine the Net Book Agreement, under which publishers are allowed to dictate the retail price of books, Sir Bryan said: 'The agreement would have come up for review as a matter of course after enactment of the Government's proposals for new legislation prohibiting anti-competitive agreements. Unfortunately, the Government has been unable to find time to introduce a bill covering these proposals this session.'

Sir Bryan's disappointment is widely shared by consumer groups. Stephen Locke, the Consumers' Association expert in this area, commented: 'It is an inexcusable delay. There will be some serious explaining to do if the Government doesn't come up with something on the subject next year, for that will call into question whether it is serious about encouraging competition. The present law is defunct.'

Although Sir Bryan, who became a lecturer at the London School of Economics without having taken a degree, is not the sort to thump tables or even raise his voice noticeably, he is clearly put out by John Major's lack of support.

He said in an interview: 'Restrictive practices stand out as an area that is out of line with the rest of the economy. We had the Government's manifesto commitment to reform of the law. We still thought that we might get a Bill in this session.' But he refused to be drawn into a dispute with his political masters at the Department of Trade and Industry, insisting that he had no doubt about their commitment to the cause.

However, a DTI spokesman was hardly shedding tears. 'The Government has to decide priorities,' he said, 'and there are other matters which have been waiting even longer. Reform of restrictive practices has not been shelved: it will be done as soon as there is time in the legislative programme.'

He was unable to say when a slot might be found, but it appears that restrictive practices reform has had to take second place to the Deregulation Bill, which involves some of the same officials.

Under the present law Sir Bryan has to register agreements that he thinks may be restrictive, and the opposing points of view eventually have to be heard by the Restrictive Practices Court.

According to Richard Whish, of King's College, London, directors of offending companies face no punishment for a first offence.

The law begins to bite only if a company is brought before the court a second time, when directors can be imprisoned for contempt. But by then the restrictive practice could have been varied sufficiently for it to be regarded as a new agreement - and the whole process must begin again.

Although Sir Bryan succeeded Sir Gordon Borrie last year with a high reputation as someone who got things done when he was in charge of Oftel, the telecommunications watchdog, he appears to have become bogged down by the system since his arrival.

He has had to postpone his early plan to build a computer model to survey the return on capital generated in different industries, and to identify companies that achieved market dominance by stealth.

'It is still in my mind,' he claimed, 'but the pressure of events has overtaken it recently.'

He has certainly been busy. In 17 months, he has made 13 referrals to the Monopolies and Mergers Commission, two to the Restrictive Practices Court and launched two investigations under the Competition Act.

Sir Bryan has been keen to crack down on anti-competitive behaviour.

His very first referral to the MMC, in August last year, was the newspaper distribution trade. And last week, after he had shaken the publishing industry, he let it be known that he was looking into two possible cases of collusion.

The first was allegations that supermarkets have colluded with food manufacturers to keep prices high by deterring price discounting.

The second was that Dixons, the electrical shops chain, was threatening electronics goods makers if they dared to supply Costco, the US warehouse club giant that is moving into Britain.

Carsberg is clearly a Costco fan. 'I like the sort of thing they are doing,' he enthused. 'They are introducing competition, and I am all in favour of that.'

(Photographs omitted)