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24/04/12 Empowerment To Challenge Anti-Competitive Practices - Bis

Businesses and consumers will find it easier to challenge firms they believe are acting anti-competitively, under proposals launched by the Department for Business, Innovation and Skills.

The proposals for facilitating ‘private actions’ have two key aims:

  • To increase growth, by empowering small businesses to tackle anti-competitive behaviour that is stifling their business.
  • To promote fairness, by enabling consumers and businesses to obtain redress for losses they have suffered due to anti-competitive behaviour.

While lawyers believe private actions could be critical to challenging anti-competitive behaviour, research by the Office of Fair Trading (OFT) shows that business experience sees this as one of the less effective aspects of the current UK competition regime.

Private actions can also be complex and costly for individuals and small to medium enterprises (SMEs), and they are often reliant on their case being prioritised for OFT investigation.

Although the total damage caused by anti-competitive behaviour may be very large, the individual loss for each business or consumer harmed is often small, making the expense of going to court impractical. This can mean that even when the perpetrators of a price-fixing scandal are caught, consumers and businesses may still lose out.

Business Minister, Norman Lamb said: “Our main aim for these reforms is to promote fairness and act as a further deterrent for firms behaving anti-competitively. Small businesses and consumers will be better equipped to represent their own interests, stop anti-competitive behaviour, and seek redress if they have suffered loss.

“Our proposals complement the changes we recently announced to the UK competition regime and will further help to boost productivity, innovation and growth for business, consumers and the wider economy.”

The specific proposals in today’s consultation will make it easier to challenge anti-competitive behaviour through private-sector led challenges by:

  • Allowing the Competition Appeal Tribunal (CAT) to hear more kinds of competition cases and granting it additional powers to allow SMEs to quickly and cheaply challenge behaviour that is restricting their ability to grow.
  • Introducing an opt-out collective actions regime for competition law, which would enable consumers and businesses to collectively bring a case to obtain redress for shared losses.
  • Promoting Alternative Dispute Resolution (ADR) to ensure that the courts are the option of last resort.

Ensuring private actions complement the public enforcement regime, in particular by protecting the incentives provided for companies to whistle-blow on cartels.

These proposals, including examples, are described in more detail in the consultation document.

The recent Government response to consultation on the competition landscape set out plans for major reform of the public competition regime, in particular the creation of a Competition and Markets Authority (CMA) and improvement to the mergers, markets and antitrust regimes. These reforms will improve the quality of decisions, support the competition authorities in taking forward the right cases and improve speed and predictability for business.

Today’s consultation will run for three months, closing on 24th July.

 

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