UK Competition Law Conference
London, England
3 December 2003- 04 December 2003
Hosted By: IBC
NERA Director Dr. Mark Williams spoke on Market Investigations at the IBC's 3rd Annual Conference on UK Competition Law in London on 3-4 December 2003. Other speakers at the Conference included senior officials from the UK's Office of Fair Trading (OFT).
The Enterprise Act 2002 makes provision for the Competition Commission to study a wide range of business conduct by means of Market Investigations. Echoing recent policy statements, Dr. Williams argued that there is a distinction between anticompetitive conduct, of the form caught by Article 82 of the EC regime and the Chapter II prohibition of the UK's Competition Act, and uncompetitive behavior on markets, where no prohibition is breached but market competition is less than fully effective. The OFT can also engage in Market Studies of markets where it has a concern that competition is not fully effective.
Dr. Williams identified a number of central themes in high profile Market Investigations and Market Studies. One key theme is the existence of regulatory or government-imposed barriers to entry. In the Supply of Milk case, entry was restricted by the existence of milk quota; in the Pharmacies case, there were government restrictions on dispensing NHS prescriptions to prevent locational leapfrogging; while supermarket entry is restricted by local planning laws. Entry into the public house sector is restricted by local licensing laws, and to the taxi sector in many cities by the taxi plate system. Dr. Williams pointed out that restrictions on airport expansion and hence on landing slots, on the type of use of radio spectrum and restrictions on the number of national lotteries could also have potential competition effects.
A second theme is the presence of customer inertia and "switching costs." Switching costs have arguably given rise to some concern in utilities such as electricity, gas and telecoms, as well as in cases such as SME Banking and Lloyds TSB/Abbey National. A related theme -- of relevance to competition policy matters in utility markets, store cards and extended warranties -- is the lack of consumer information and awareness.
Lastly, Dr. Williams identified the trend for competition policy enforcement to push new frontiers in terms of the business sectors caught. He pointed to a range of sectors of the economy that had traditionally seen themselves as perhaps immune to the full force of competition law but that are now feeling its full effect: the Milk Marque investigation showed the relevance of competition policy in agriculture; the Premier League investigation, its relevance in sport; the Public Schools price fixing investigation, its relevance in education; and the OFT has even considered challenging the position of QCs in the legal profession.
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