Head of MMC backs reform

Mary Faganand Peter Rodgers
Sunday 21 May 1995 23:02

Graeme Odgers, the chairman of the Monopolies and Mergers Commission, this weekend called for the reform of competition legislation to give the Office of Fair Trading tougher powers against restrictive practices. He also added to the pressure on Michael Heseltine, President of the Board of Trade, to admit that Britain is in danger of falling behind in competition policy and change the law.

While lining up on these issues with Sir Bryan Carsberg, the outgoing head of the Office of Fair Trading, Mr Odgers nevertheless warned against tampering with the basic structure of the British competition system. His statement, in an exclusive interview with the Independent, came only days before a report by the House of Commons Trade and Industry select committee is expected to criticise heavily current policy and back Sir Bryan's proposals for major reforms.

Rejecting calls by Sir Bryan to merge the OFT and the MMC and to limit the role of politicians, Mr Odgers said: "We all agree there is a need for development of the system and if what he has done is to help give impetus to that I will be very pleased. But I will be deeply disappointed if it results in the destruction of the underlying regulatory system, which is enormously strong."

Sir Bryan's parting shot as he left last week was to call for a complete shake-up of the British system to align it more closely with the methods used in the European Commission's competition directorate. This would include harsh and immediate penalties for those found guilty of anti-competitive behaviour and would reduce the control of politicians on key decisions such as restructuring monopolistic industries.

Mr Odgers said that such an extensive reform would be throwing the baby out with the bathwater. Furthermore, he believed that the Government "has the right and the responsibility to make the decisions and to carry the can".

He agreed with Sir Bryan that the Restrictive Trade Practices Act needed to be substantially amended or replaced to bring it into line with European legislation. This would allow the authorities to prohibit abuses and levy large fines. At present, offenders must be proved guilty and then offend again before action can be taken.

The Government agreed in principle to these restrictive practice law changes six years ago but has failed to act. Sir Bryan has repeatedly expressed his own frustration and Mr Odgers now makes clear that in this area they are of one mind.

But in contrast to Sir Bryan, who wants to depoliticise the system, Mr Odgers strongly defended the role of politicians in key areas of policy other than restrictive practices. He acknowledged he was disappointed whenever his recommendations were not accepted by Mr Heseltine - for example, after the MMC report on the gas industry. But he said: "If mandatory change is to be made in an industry it is better to be made by a government answerable to Parliament than by officials or indeed by a court."

Mr Odgers called on Sir Bryan's sucessor - as yet unnamed - to work towards an understanding between the OFT, the MMC and the Government. "While there are differences of views and functions, each party must approach their job in a way that is sympathetic towards the system otherwise the system is going to creak," he said.

Mr Odgers angrily rebutted allegations that under his stewardship business has been favoured over the interests of consumers. He said: "I reject absolutely outright that we don't take into account the consumer interest. We have to take into account the consumer interest under the law - and we always do that."

Two key elements of the definition of public interest were the maintenance and development of competition and the protection of consumers in terms of the price, quality and range of goods and services.

Some consumer groups would like to see consumer interests dominate, Mr Odgers said. But he added: "My view is that in the longer term the public interest is the same as the consumer interest."

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