‘Competition authorities’ Category

Respond now to BIS Competition Consultation – Deadline: 13 June 2011

June 5th, 2011

The Cooperatition Incubator is encouraging all our campaign partners to try and submit a response to the Department for Business, Innovation and Skills (BIS) consultation on the future of the UK competition regulation regime:

Consultation document: A competition regime for growth – A consultation on options for reform

Since 2008 Business in the Community and The Cooperatition Incubator have been actively researching – with the input of a number of experts – the competition law barriers to companies collaborating through voluntary agreements/standards to internalise the often substantial external social and environmental costs of doing business.   As Andrew Dakers’ article last Friday on The Guardian Sustainable Business Blog explained, given the huge reliance today on self-regulation, this is now more important than ever.


Unfortunately cases such as the Dairy investigation and Laundry detergents have seen companies, trying to do the right thing by society and the environment, fined many tens of millions. Clearly the system needs to be fixed.   We believe resolving this problem is an integral part of shaping a responsible marketplace as we rebuild and strengthen the British economy.

In the past 12 months the problem has been recognised by Robert Peston (BBC), Jason Clay (WWF US) and the British Prime Minister David Cameron.   Work is now underway between the Department for Business, Innovation and Skills (BIS), Business in the Community (BITC) and the Office of Fair Trading to unpack and resolve the problem – but we still need your support to ensure the necessary changes are implemented.


Breaking down the competition law barrier to scaling up responsible business practice comes down to resolving fundamental problems with regard to how the UK competition authorities and EU DG Competition presently interpret the legal framework.  We believe now is the time for a change in approach if degradation of our natural environment is to be stopped and social challenges, such as obesity and alcoholism, tackled head on by business, NGOs and government working together through co/self-regulatory frameworks.

To help support the campaign please send a short email to Duncan Lawson (Consumer and Competition Policy, Department of Business, Innovation and Skills): cma@bis.gsi.gov.uk by Monday 13 June 2011.

Your message could be short and simple – perhaps along the lines of:

Dear Mr Lawson, I am writing in response to ‘A competition regime for growth – A consultation on options for reform’ consultation questions: “Q.2 The Government seeks your views on the potential creation of a single Competition and Markets Authority; Q.19 The Government seeks your views on appropriate objectives for the [Consumer & Markets Authority] CMA and whether these should be embedded in statute; and Q.20 The Government see your views on whether the CMA should have a clear principal competition focus.

“We welcome the proposals for a new CMA.  We believe it is vitally important that public interest factors are explicitly integrated into the objectives of the CMA, as was the intention of the previous competition regime. A new business unit specialised in balancing public interest factors, supported by guidance, tools and ways of working with other government departments should be a core objective of the new CMA – potentially embedded in statute.  This will provide the certainly that greater investment in the UK demands.  Investors will know that they can secure the comfort needed before they make long-term investments in areas where voluntary self-regulation/ collaboration on environmental and social issues is required.

“We welcome the Prime Minister’s commitment to deal with this problem last December and urge all stakeholders to continue to work together towards a rapid resolution of the issues.  The CMA should focus on competition, but also have the capability as described to balance public interest factors, particularly in the case of voluntary agreements.  This should build on: the Office of Fair Trading’s (OFT’s) 2009/10 research in this area; balancing of public interest factors achieved by other UK and international regulators; and the OFT’s existing experience in approving ‘consumer codes’.

Yours sincerely…”

We appreciate this request is very close to the deadline, but hope you can take five minutes out to send a short email.

Thank you for your support – and if we can clarify any aspects of our research conclusions, please do not hesitate to contact us.

Nations must integrate sustainable development goals into competition regimes, says Pasayat

August 2nd, 2010
In a speech on 29 July at The Global Summit on Sustainability 2010 (National Liberal Club, London) Hon’ble Dr. Justice Arijit Pasayat, Chairperson, Competition Appellate Tribunal  (India) spoke extensively on the interaction between sustainability and  competition law.  He said:
“Law and society go hand in hand.  With changing notions and shifting mind-patterns in the society, the Law must change and it must do so with social change.  This has engendered a multi-disciplinary approach of law.  Law, today, deals with different aspect in various fields of life and this interaction between two different fields requires intricate study of the interface in question…
“Sound economic analysis is necessary to take the right cases and the right decisions.  It is crystal clear that sound economic analysis is central to competition policy. It is equally true that competition policy shapes fundamental economic decisions on investment, on consolidation and most significantly on pricing.   …
“The interest in exploring the relationship between Law and Environment came from Global Warming and rising temperatures globally due to heavy pollution and Green House emissions.  … Such is the magnitude of the problem.  It is long overdue that policy changes be made and laws be enacted in order to promote development that is environmentally sound and customer friendly. …
It is crucial that nations across the globe integrate sustainable development goals into their competition regimes.  Sustainable development law deals with the interface between social, economic and environmental law.
“A competition policy that is sustainably apt would take environmental factors into consideration along with the economic considerations on which it is based.  It has often been seen that in the mad world of competition where everyone is running the rat race independent of his choice, one tries to sell its product and service at every cost.  All methods are adopted to gain an unfair advantage over the competitor and cheap methods are adopted to increase profits.  This often leaves resources scrupulously used and most of this is often wasted.  …
“Around the world as an increasing number of countries move toward economic liberalization, there is renewed interest in adopting or modernizing Competition Laws.
“Markus W. Gehring in his article, ‘Competition  for Sustainability: Sustainable Development Concerns In National and EC Competition Law‘, proposes three ways in which competition regimes across the globe can be made environmentally friendly that focus on sustainable development as one of its objectives.  First, substantive international competition rules with sustainable development goals, though economic laws and disciplines may provide too blunt an instrument to achieve important social or environmental goals in many areas.  Second, express exceptions or exemptions can be granted where these rules might limit the abilities of countries to use social and environmental measures.  Third, enhanced application of competition rules may be negotiated, where fair competition favors small and medium size companies and more environmentally favorable effects.
“The first form is not very widely used.  Only a very few countries, such as South Africa, have included substantive provisions to promote social development in their competition laws.  Most countries adopt for some versions of the second form of sustainable competition law.  Few countries’ laws are as outspoken about their public policy goals as is Spain in its new draft competition law.  This new draft law explicitly lists environmental protection and social policies as grounds upon which the government could repeal a competition decision.  The third form is relatively unproblematic as it creates a win-win situation for competition and sustainable development.  Fostering further competition in certain markets could also be positive for sustainable development. Say for example, if particular global players hold a near-monopolistic position in an industry, and any small or medium sized enterprises were needed to encourage experimentation and make more sustainable technologies viable, competition law could achieve benefits.  Again in the energy sector, global energy giants presently offer cheap, reliable fossil fuels by externalizing many public costs.  This way they ‘crowd out’ smaller players who could viably develop new renewable energy sources such as solar, wind or small-scale hydro.  Competition law and policy which breaks up or segments those markets would permit the small companies to make a profit, encouraging the development of these small scale alternatives.  Competition has a significant international dimension.  Global debates on sustainable competition law have only just begun.  …
“Article 3 of the new TEU says that the EU shall work for the sustainable development of Europe based on, among other things, a highly competitive social market economy.  The European Court of Justice (ECJ) recently upheld a German law that guaranteed a certain percentage of the German energy market for alternative, renewable energy sources.  The ECJ ruled that as renewable energy was a legitimate social goal, the measure would be exempted from European Union competition laws, which otherwise might have prevented the use of such policies. …
“[A survivable ecological economic system] entails maintenance of (1) a sustainable scale of the economy relative to its ecological life-support system; (2) a fair distribution of resources and opportunities between present and future generations, as well as between agents in the current generation, and (3) an efficient allocation of resources that adequately accounts for natural capital. We can only be certain we have achieved sustainability in retrospect. Sustainable policies and instruments are therefore those that we predict will lead to the achievement of the goal. …
“The aims of competition (anti-trust) laws are to ensure that consumers pay the lowest possible price, commonly called ‘the most efficient price’ coupled with the highest quality of the goods and services which they consume. This, according to current economic theories, can be achieved only through effective competition. Competition not only reduces particular prices of particular goods and services – it also tends to have a deflationary effect by reducing the general price level. It pits consumers against producers, producers against other producers (in the battle to win the heart of consumers) and even consumers against consumers (for example in the healthcare sector in the USA).”

The Cooperatition Incubator welcomes new OFT Short-form opinions process

June 24th, 2010

The Cooperatition Incubator has today welcomed the UK Office of Fair Trading’s (OFT) announcement that it is establishing a ‘Short-form Opinions’ process.  The first Short-form opinion was issued (27 April 2010) on questions raised by Makro Self-Service Wholesalers Limited and Palmer & Harvey McLane Limited in relation to their proposed joint purchasing co-operation agreement.

In March 2010 Philip Collin, Chairman of the UK Office of Fair Trading announced that the OFT will offer ‘Short-form Opinions’ (SFO). Introducing the new process the OFT acknowledged:

“Concerns have been expressed that uncertainty about how competition law in particular might be applied has led to some forms of potentially beneficial collaborative work between businesses not going ahead. In some cases, it may not be clear how the competition rules may be applied to collaborative conduct, for example with regard to some government-led initiatives.

“As a result, we are proposing to trial a ‘short-form’ opinion procedure. This would allow us, in a limited number of cases, to provide prompt guidance where there is a novel or unresolved issue of wider interest arising in the context of a specific prospective collaborative initiative. We would like to hear from you and your members about issues that you or they think would benefit from clarification through means of such a ‘short-form’ opinion.”

In April 2010 – when they published their first SFO – the UK Office of Fair Trading added:

“Under the Short-form Opinion process the OFT aims to provide guidance, within a prompt timetable, to businesses seeking clarity on how the law applies to prospective collaboration agreements between competitors which raise novel or unresolved competition issues….

“During its analysis, the OFT identified a concern that certain exchanges of information between the firms could potentially lead to a reduction in competition. However following OFT advice, the parties have agreed to ensure the data they supply to each other is general and aggregated, preventing either company from extrapolating specific or sensitive information.

“The new process is being trialled in response to feedback from business that some potentially beneficial collaboration between companies is not proceeding due to concerns about infringing competition law, which carries civil and in some circumstances criminal sanctions.”

Andrew Dakers commented:

“The OFT’s Short-form Opinions process represents a significant step towards addressing the concerns that we have been raising over the past few years that companies are not engaging in collaborative agreements that would deliver public benefit, due to competition law risks.  This new process will help companies mitigate the risks and is a key milestone in our push for a co-regulating, responsible economy.”

“The OFT and Department for Business, Innovation and Skills (BIS) must now set out how the benefits of this change can be independently assessed; how the new process can be communicated across the business community; the extent to which it will enable voluntary horizontal agreements that pass price increases onto the consumer, whilst delivering social/ environmental benefits; and whether there is the necessary capacity in the OFT for resource constraints to not be a barrier to the issuing Short-form opinions.”

Details of the OFT’s new approach can be found here:

Competition Commission recommends new ombudsman in Grocery sector

August 5th, 2009

VegThe Independent reports how in April 2008, after a gruelling two-year inquiry, the UK Competition Commission unveiled its eagerly anticipated final report on the £110bn grocery sector.  A key recommendation was to establish an ombudsman to police relations between the big grocers and suppliers, in an effort to stamp out alleged cases of bullying or the supermarkets allegedly abusing their immense buying power.

The commission, which does not have the power to introduce an ombudsman itself, sought the agreement of supermarkets for this. But most have vehemently opposed the idea, arguing it would add red tape and costs, which would be passed on to customers.

Yesterday, the commission bared its teeth and formally recommended to Lord Mandelson’s Department for Business, Innovation and Skills (BIS) that it should establish an ombudsman to arbitrate on disputes between grocers and suppliers, under the terms of the new Groceries Supply Code of Practice (GSCOP). The new code will come into effect on 4 February 2010, replacing the hitherto voluntary code that the big four grocers signed up to. The ombudsman and GSCOP applies to the 10 grocers with annual turnover of more than £1bn: Tesco, Asda, Morrisons, Sainsbury’s, Aldi, Lidl, Waitrose, The Co-operative Group, Iceland and Marks & Spencer.

Peter Freeman, the Competition Commission’s chairman, said:

“Our inquiry clearly revealed problems that require action and which, if left unchecked, would damage the consumer. We continue to believe that everyone’s interests – and that includes retailers – would be served by tackling a problem that has clouded the industry for many years now.  The current economic difficulties if anything reinforce rather than reduce the need for action.”

While industry observers have welcomed the introduction of an ombudsman, some remain sceptical that the body would be able to rein in any activities of the big supermarkets.

Bryan Roberts, the global research director at Planet Retail, says:

“It is welcome in practice, but I think it will be a paper tiger. It will probably not amount to much.”

Grocery suppliers certainly feel that the current system favours the supermarkets. At present, the Office of Fair Trading is responsible for monitoring relationships between suppliers and supermarkets under the voluntary Supermarkets Code of Practice.

However since the code came into effect in 2002, the OFT has never moved against a supermarket after receiving a complaint from a supplier, although the grocers assert this is because the existing code works.

In reality, suppliers have little confidence in the regulator to deal with grievances and – given the enormous buying power of the big grocers – are petrified of having their contracts terminated if they stick their head above the parapet to complain. More specifically, suppliers feel they lack protection against practices that can include retrospective changes to contracts agreed, or being charged for wastage or shrinkage when products break or get stolen in the supply chain.

Duncan Swift, the joint head of food at the accountancy firm Grant Thornton, which advises financially distressed food businesses, says:

“Having seen the lack of effectiveness of the [voluntary] code since 2002, you effectively need a regulator that has the appetite and the industry teeth that are seen to make a difference.  All the supply-chain risk continues to be borne by the suppliers.”

The ombudsman’s overriding role will be to undertake investigations and to act as an arbitrator between retailers and suppliers in disputes arising under the terms of newly introduced GSCOP.

In certain circumstances, it is envisaged that the ombudsman will be able to investigate “proactively” areas of complaints regarding a particular retailer, while maintaining the anonymity of the supplier.

Fear of losing a supermarket’s business is a key reason why so few suppliers come forward.

However, if a supplier wants to get a complaint formally resolved, it will almost certainly have to be named to enable a thorough investigation and arbitration. A supplier that wins a dispute could be reimbursed for lost business and incurred costs in bringing the action – although this has not yet been decided.

A decision is likewise pending on whether fines will also be issued, but the Competition Commission said yesterday that:

“The ombudsman would be more effective if it had more comprehensive powers to investigate and penalise retailers for non-compliance with the GSCOP.”

Over recent years, the highest- profile case referred to the OFT involved Ferndale Foods and Asda. But in 2005, the OFT dismissed the ready-meal supplier’s claim that Asda has failed to give it the full 90 days notice before terminating its contract. Mr Swift said: “The OFT has done nothing of note in regulating the supermarkets over the last seven years.”

Only a few of the big grocers, including Waitrose and Aldi, are in favour of the ombudsman. While the big four supermarkets broadly welcome the strengthened GSCOP and it being extended to their six rivals, Tesco, Asda and Sainsbury’s are firmly against the introduction of an ombudsman.

They argue that it represents unnecessary red tape, will lead to higher costs for consumers and will provide additional protection for some of the world’s most powerful consumer goods companies, such as Unilever and Procter & Gamble.

Lucy Neville-Rolfe, Tesco’s executive director, said:

“We believe that, perversely, the ombudsman would mainly benefit large successful suppliers who are well able to look after their own interests.

“It’s a highly competitive industry and if our ability to negotiate with such suppliers is reduced, the inevitable result will be higher prices to consumers at a difficult time.”

An Asda spokeswoman said: “An ombudsman is bad news for consumers – it will effectively be a one-sided pressure group for price rises from big multinational suppliers, allowing inflation in through the back door.”

Sainsbury’s said: “We consider that the OFT is well placed to continue in its current role of regulating the code and that there is no need to establish new powers.”

However, Mr Swift says the idea that the ombudsman will hit consumers is “scaremongering”. The Commission forecasts that the cost of the ombudsman, including set-up costs borne by the grocers, will be about £5m a year, compared to the £70bn of grocery supplies to retailers in the UK.

In fact, Grant Thornton estimates the ombudsman will only add 1.25p to the average family weekly grocery bill. However, the British Retail Consortium said: “Lord Mandelson must reject the Competition Commission’s recommendation.”

In fact, some are sceptical that the the department will want to bring in the ombudsman any time soon. For those in favour of an ombudsman, the worst-case scenario is that BIS will not want to introduce the necessary legislation to establish the ombudsman and will refer it back to the OFT.

Mr Swift said: “BIS is highly unlikely to do anything before the next general election. That means that it will be left to the OFT, to take on responsibilities which an ombudsman would have had.”

Morrison and Tesco fight OFT findings

July 23rd, 2009

Source: FT.com

Tesco, Britain’s biggest retailer, and smaller rival Wm Morrison insisted on Thursday they would not give up their fight against allegations that they fixed the price of milk.

The Office of Fair Trading said that only Tesco and Morrison were continuing to contest the provisional findings of its investigation into alleged price fixing in the UK dairy market, which accused a number of dairies and supermarkets of colluding to raise prices artificially in 2002 and 2003.

Other parties investigated by the OFT, including Asda, The Cheese Company, Dairy Crest, J Sainsbury and Robert Wiseman Dairies, have all settled with the OFT. Arla Foods is being spared a fine for its role after co-operating with the OFT.

The OFT sent out further evidence on Thursday that its claims support its findings of alleged collusion to all the parties involved in the investigation.

“At this stage it should not be assumed that the law has been broken,” the competition watchdog said, adding that it would “carefully consider any representations, and the evidence as a whole, before reaching any final conclusion.”

Tesco said it would continue to mount a strong defence against the OFT’s allegations.

“We have made it clear that we did not collude with anyone and that remains the position,” said Lucy Neville-Rolfe, director of corporate and legal affairs at Tesco.

She said Tesco did not believe that the nature of communications with suppliers, at the heart of the investigation, went beyond permissible discussions under competition law.

She added: “We will of course look carefully at any new evidence the OFT sends to us relating to events that took place in 2002 and 2003. We will, however, continue to defend our position strongly.”

Morrison will also continue to contest the allegations.

It said in its own statement: “We wait to read the document in detail; however, our initial view is that nothing has changed since the original statement issued two years ago.

“It remains our firm belief that there are no reasonable grounds for the OFT’s allegations against us and no evidence to suggest our involvement, therefore we are continuing to contest the provisional findings and make strong representations that Morrisons should not be part of this inquiry.”

It is continuing to fight as it does not believe it was involved in fixing prices, and does not see that there is compelling evidence to suggest that it was.

It has also only been accused in one of the particular instances of alleged price fixing.

The OFT said Tesco and Morrison would now have an opportunity to make written and oral representations in response to the additional evidence.