Pre-Budget Statement Enterprise: Brown's 'prudence with a purpose'Help for watchdog to tackle cartels

A FRESH emphasis on cartel busting by the Office of Fair Trading was signalled by the Chancellor yesterday as part of the Government's attempt to create a more dynamic business culture.

Gordon Brown announced that he would be seeking to "open up and enhance competition" by giving the Office of Fair Trading, headed by John Bridgeman, a 20 per cent increase in funding.

This would ensure that the office had the resources in the wake of the introduction of the proposed Competition Bill to break down barriers preventing new firms entering markets and keeping prices high for consumers.

Details of how the fresh funding will be targeted were absent from yesterday's statement.

However, Peter Mandelson, the Secretary of State for Trade and Industry, is due to describe how the new arrangements are to work when he publishes the White Paper on competitiveness later this month.

The developments come at a time when the OFT has launched a series of high-profile investigations, in particular, the ongoing inquiry into Britain's supermarkets.

They also follow the publication last week of the report Driving Productivity and Growth in the UK Economy by McKinsey & Co, the management consultants.

That report, which showed British productivity significantly lagging that of other industrial nations, pointed to the development of a modern approach to competition as a way of improving on that state of affairs.

Among the report's recommendations was that the bodies responsible for enforcing competition rules should be strengthened and their roles clarified.

"These institutions will need to have the resources and authority to investigate all substantial breakdowns in competitive intensity, identify any root causes and devise appropriate remedies," it said.

The report also called for the strengthening of the mechanisms that are used to identify "inappropriate competitive behaviour" and penalise those undertaking it.

"The impact of a competition framework depends not only on the action it takes to correct abuses of competitive power, but also on the broader incentives it creates for competitive behaviour," it said.

The report suggests a number of ways of achieving this, including the introduction of private law suits, which are currently unavailable in the United Kingdom.

The document also calls for competition policy to be refocused around increasing efficiency and productivity.