"The UK competition arrangements are
highly regarded around the world. There is, however, evidence
that industry regulators have not generated the level of
competition cases necessary to develop the body of case law and
experience that is the hallmark of a modern competition regime, and
that potential benefits for consumers are not being fully
realised."
Amyas Morse, head of the National
Audit Office, 22 March 2010
A National Audit Office review of the regime for overseeing
markets and enforcing competition law in the UK has found that it
is generally effective and well regarded by comparison with
international equivalents. However, the NAO has found that the
competition system as a whole must still address a number of
challenges to function as intended.
Responsibility for the competition regime rests with a number of
bodies, but the principal competition bodies in the UK are the
Office of Fair Trading and the Competition Commission. Sector
regulators such as Ofgem and Ofwat also have competition powers.
The direct cost of the competition regime is calculated to be about
£27 million each year.
While the performance of the separate bodies is well regarded,
the NAO has identified four key issues which ought to be addressed
as the system develops.
First, the competition system relies on case law and precedent.
However, to date, most sector regulators have used their powers
sparingly. The NAO recommends the Government consider if the
incentives for regulators to use their competition powers are
appropriate given the need to establish the body of case law which
is required in an effective competition system.
Secondly, the process of enforcing competition law itself is
often lengthy and most decisions are appealed against. There is a
risk that the length, and uncertainty of outcome of the enforcement
and appeals processes may reduce the appetite of the authorities
for using their competition enforcement powers. The NAO recommends
the Government should review whether progress in the development of
the body of case law has been adversely impacted by these
factors.
Thirdly, the bodies have not referred markets to the Competition
Commission as much as expected. In future the NAO considers the
Government should adopt a presumption that all Regulators should
actively consider using their powers to make market investigation
references on a regular basis.
Finally, the competition system comprises several bodies and
work flows unevenly between them. The NAO has called on the
Government to consider if arrangements could be made to allow
resources to flow around the system and between organisations more
easily.