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Media Briefing Note: Office of Fair Trading and Competition Commission Merger

13 June 2011

LONDON, 13 June 2011 - The Department for Business, Innovation and Skills consultation on reforming the UK's competition regime closes today, 13 June 2011.  One of the main proposals is to merge the Office of Fair Trading ("OFT") and the Competition Commission ("CC") to create a single competition authority:

http://www.bis.gov.uk/assets/biscore/consumer-issues/docs/c/11-657-competition-regime-for-growth-consultation.pdf

The competition team at Hogan Lovells has submitted a response to the consultation, making a number of recommendations, including the following:

  • The government must ensure that change to the UK competition regime is not being made for change's sake.  Interference with the current regime should only be considered where it is justified by clear and significant benefits which more than offset the upheaval which will inevitably result (particularly as a consequence of the proposed creation of a single Competition and Markets Authority). 
  • The government's aims of reducing costs and speeding up investigations should be supported - but the merging of the OFT and the CC is not obviously the best way of achieving this laudable aim and could potentially be counter-productive.  
  • The current two-tier system generally works well, particularly in merger and markets regimes.  When it comes to antitrust enforcement under the Competition Act (which is currently within the sole ambit of the OFT) many cases are taking too long.  However it needs to be recognised that the antitrust regime is still relatively young and that measures aimed at improving its operation continue to be implemented. Reform is necessary, but that reform need not be revolutionary.
  • It is far from clear that a single Competition and Markets Authority is a pre-requisite to further improvement. The government's objectives could be achieved through other means - such as improved liaison between the OFT and CC, refocusing the currently disparate range of responsibilities of the OFT, and making antitrust enforcement more efficient at the administrative stage.  It would be regrettable if the UK's largely well-functioning and highly regarded competition regime were to be radically overhauled without a clear need and without full appreciation of the potential adverse consequences in terms of disruption and loss of momentum.

ENDS

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