Euro-style competition control

The UK is likely to move towards European-style competition regulation, which would sharply increase the cost of falling foul of the law, warned a senior solicitor.

The President of the Board of Trade Margaret Beckett is expected to produce a white paper on competition law this summer and to introduce a bill later in the year.

Guy Leigh, competition and regulation partner at City firm Theodore Goddard, said a shift from an investigative to a prohibitive system of competition control would have a profound effect on companies.

In particular, it would be vital to avoid participation in either formal or informal cartels, or abuse of a dominant market position (using predatory pricing, for example).

Under the current system, ‘If something is found to be against public interest then one is asked to desist in one of a number of ways.

‘Usually, one is asked to give certain undertakings: perhaps not to conduct affairs in a certain way, not to engage in predatory pricing or to supply new customers,’ said Leigh.

But nothing happens under the current system until an investigation has been concluded. In contrast, under the new system, any abuse of market power would constitute an infringement from the word go. Cartel agreements would be unenforcable and third-parties able to sue. Companies would also be subject to fines. Under EU law fines can be as much as 10% of turnover.

‘It does concentrate the mind,’ Leigh says.

He adds: ‘It will make it much more difficult for business to cock a snook at competition law. It will make it more feasible for Brussels to say, “You deal with it – it’s essentially an English problem.” This will make it easier for Brussels and London to co-operate. London is going to have some teeth.’