UK competition white paper – reforming the regime

United Kingdom
The Government published its Competition White Paper setting out proposals to reform the UK merger and monopoly review regimes on 31 July 2001.

Many of these proposals were outlined in the Government's strategy paper "Productivity in the UK" published in June 2001 (see article in LawNow of 18 June 2001 "Government plans to reform competition regime"). However, some detail on certain of the proposals in addition to new proposals are noted below:

Strong, proactive and independent competition authorities

Regarding the OFT's and CC's new ability to advise the Government on new regulations having the potential to be anti-competitive, the Government will respond publicly on such advice within 90 days.

Modernising the merger regime and investigating markets

Exceptionally, where competition considerations point the other way, it will be possible for the authorities to clear a merger or take no or limited action to affect the way a market operates, where they believe it will bring overall consumer benefits.

Strong deterrents against anti-competitive behaviour

Not convinced by the deterrent effect of fines, the Government proposes introducing a new criminal offence for individuals who set up and maintain hardcore cartels, such as price-fixing, market-sharing and bid-rigging. The new offence will also target senior management or directors who either condone or encourage the arrangement. The OFT will be able to bring a criminal case against an individual whenever a cartel is implemented or intended to be implemented in the UK.

Ensuring real redress for harmed parties

The CCAT will be able to hear claims for damages brought by harmed parties. Consumer groups will be able to bring claims on behalf of individuals who have suffered harm as a result of anti-competitive behaviour. The Government intends to repeal the exclusion of vertical agreements under the Competition Act, which means that the more narrowly drawn EC Block Exemption provisions will prevail. The OFT will be able to seek a court order disqualifying company directors where serious breaches of competition law have been found.

The Government envisages that changes which do not require legislation will be implemented in the coming months. It will include in the Enterprise Bill those reforms requiring legislation. To inform the process of drafting the Bill, comments on the White Paper are invited by 5 October 2001.

For further information, please contact David Marks by e-mail at david.marks@cms-cmck.com or by telephone on +44 (0)20 7367 2000.