‘Other news’ Category

Proposal to continue Short form Opinions under new CMA regime welcomed

September 30th, 2013

A new consultation by the CMA proposes to continue the pilot of the Short form Opinion (SfO) process introduced in 2010.   The consultation document reads:

4.1 In 2010, the OFT reviewed its approach to opinions under the Modernisation guideline (OFT442) in response to concerns raised by business and other stakeholders that some forms of beneficial collaboration were not proceeding for fear of infringing competition law.
4.2 Following this review, the OFT introduced a SfO process on a trial basis. SfOs were designed to provide guidance, within a prompt timetable, to businesses and their advisers on the application of competition law to prospective agreements between competitors raising novel or unresolved questions, the clarification of which would benefit a wider audience. The OFT’s trial SfO
process was only available for a limited number of cases per year in order to avoid a return to a notification regime.41

Proposed adoption and extension of the SfO process
4.3 The Transition Team has reviewed the OFT’s SfO trial as a part of the transition process and considers that SfOs should continue to be offered as a part of the CMA’s practical guidance and advocacy work. The Transition Team also considers that SfOs assist the future development of competition law and policy in the UK.
4.4 The Transition Team has therefore proposed that the CMA Board (once
established) should adopt the OFT’s SfO process on a trial basis, subject to
certain modifications described below, designed to extend the use of the tool
and clarify the process of requesting an SfO. There is no proposed end date
for the SfO trial. However, the CMA will review the SfO trial as appropriate.

Summary of proposed changes to the SfO process
4.5 The Transition Team proposes to clarify that businesses and their advisers as  well as government policy advisers are able to submit a request for an SfO, subject to their agreeing to comply with the CMA’s procedural requirements. The Transition Team also proposes to extend the scope of the SfO process to  cover not only prospective horizontal agreements between competitors but
also prospective vertical agreements between parties who do not compete with each other.
4.6 With regard to procedural enhancements, the Transition Team proposes that the CMA Board (once established) should adopt revised procedures in order to provide businesses and their advisers with greater clarity on the process for requesting and issuing an SfO. These will include setting out clearly the process of submitting a request for an SfO, how the CMA will prepare, issue
and publish an SfO, and how the CMA will treat information that it receives in the context of SfO enquiries or requests.
4.7 If the Transition Team’s proposal is accepted by the CMA Board, the revised or new procedures and practices will be set out in further detail closer to, or shortly after, 1 April 2014.
CONSULTATION QUESTION
Do you agree with the Transition Team’s proposal to extend the availability of SfOs to prospective vertical agreements in addition to prospective horizontal agreements? Please give reasons for your view.

Responses to cmaconsultation@bis.gsi.gov.uk by 5pm on 11th November.

Andrew Dakers, Founder, said:

“This news is welcome and I hope the start of a new conversation with the CMA around how the SfO process can be improved – as well as the wider guidance around when businesses should compete or collaborate to achieve responsible business outcomes.  The initial suggestions regarding opening up the SfO process are encouraging as well as the idea of broadening the process to include vertical agreements. However, there are additional barriers that need”

EU launches Better Self- and Co- Regulation Community of Practice

July 15th, 2013

There is growing evidence that self- and co-regulation can only be effective and efficient if they respect basic design principles, such as openness, inclusiveness and accountability. This calls for a new culture of relationships between civil society organisations, the business community and policy-makers.

In response the European Commission has consulted on a set of principles (to which The Cooperatition Incubator contributed) and launched a new Community of Practice to help build capacity amongst key actors.  Given the broader nature of The Cooperatition Incubator’s work we would also recommend reading the new EU Regulation on European Standardisation.

We would encourage you to join the community.

Environmental Audit Committee calls on Government to ensure CMA remit takes account of sustainable development

May 13th, 2012

The Government must develop a joined-up strategy to change the UK’s unhealthy and environmentally damaging food system, as fears mount about global food security, MPs on the Commons Environmental Audit Committee warn.

Crucially the Environmental Audit Committee’s Sustainable Food report recommends that:
the Office of Fair Trading’s remit should be amended so supermarkets are not blocked from cooperating on sustainability initiatives.

The full report reads…

43. ‘Choice editing’ involves retailers limiting the range of products they make available to customers. Supermarkets, for example, might be able restrict the sale of produce with high environmental impact, for example, by reducing the numbers of some out-of-season and imported goods. The Food Ethics Council has argued that retailers pursuing choice editing strategies are likely to be at a competitive disadvantage. With the exception of a minority of businesses that position themselves specifically as leaders in the ‘ethical’ market, businesses that raise the prices of their products or reduce choice risk losing customers to their competitors. They concluded that, in the absence of regulatory intervention by Government, only a coordinated effort by the major businesses across a sector could get past this obstacle. By co-operating and adopting similar choice editing strategies, supermarkets would be able to reduce the risks of pursuing such strategies. However, such collaboration would potentially contravene competition law and expose those involved to challenge by the Office of Fair Trading or by the European Commission. And any regulatory regime with similar aims could also be construed as interference with EU Single Market rules. This barrier would also apply to public procurement through Government Buying Standards (paragraph 45). The Food and Drink Federation’s preferred approach was therefore for industry to continue its efforts to make its products as healthy and sustainable as possible, while offering consumers appropriate choices.81 When we raised this issue with the Minister, he regarded this as primarily an issue for industry to judge:

I recognise that the supermarkets are extremely nervous about competition law. … We do have periodic meetings with the senior chief executives of the supermarkets, but it is on a very clear agenda that makes sure that … we can’t talk about price or anything that could be construed as collusion. I can see the argument that they would be very nervous of it, yes. You would need to ask a lawyer whether in reality there is something in competition law that says they should not work together on sustainability. I don’t know. That would be for a lawyer to judge, but I am very conscious of their sensitivity over anything like that.

44. In March 2012, the Government announced proposals to create a new Competition and Markets Authority that would bring the Competition Commission and the OFT’s competition functions into a single organisation. The Government should amend the Office of Fair Trading’s remit to take account of sustainable development while protecting competition, and task the OFT and the Competition & Markets Authority to investigate and clarify the scope for supermarkets to cooperate in developing shared sustainability good practice.

Coalition may be ready to “rethink competition law” observes Wintour

December 29th, 2011

Writing in The Guardian on 28 December 2011, Patrick Wintour  identifies competition law as an area where consensus in the coalition could drive reform:

“Jesse Norman’s latest attack on crony capitalism shows there is a thirst for action amongst influential thinkers on the Tory benches. He says of the two distinguishing features of crony capitalism: “Business action loses any relation to the wider public interest and business reward is separated from business merit. Crony capitalism is what happens when the constraints of law and markets and culture cease to be effective. Entrepreneurship and value creation are replaced by rent-seeking, and certain groups become enormously wealthy without taking risks.”

“Norman argues that this makes for a less efficient and unbalanced economy. This could be the big domestic political dispute of 2012. Conservatives in this camp believe Cameron can pull off an intellectual heist by presenting himself as the man to rescue Britain from the predatory crony capitalism that Labour had allowed to develop.

“Their argument is that crony capitalism really took root in the late 1990s when the Bank of England ceased to be responsible for systemic risk in financial markets, the doctrine of inflation targeting was institutionalised, and the banks were allowed to ramp up borrowing. All this occurred under a Labour government, 10 years after the sudden deregulation of financial markets under Thatcher that was known as Big Bang.

“Under this argument, issues such as corporate governance, tackling short-termism among investors, rethinking competition law and building strong regions around new democratic institutions such as city mayors will come to the fore. They will be the building blocks for economic growth.

“There is an appetite for this agenda across the coalition. Ed Miliband’s half-formed outburst against predatory capitalism could be wrested from him and become the new consensus. Politics is that fast and cruel.”

Letter to The Times

August 15th, 2011

Unpublished letter to The Times newspaper

Dear Editor,

Whilst Alex Spence and Robert Lea (“Supermarkets fined over fix that raised dairy produce by 2p”, The Times, 11 August 2011) suggest Tescos response to the OFT’s recent judgement is extraordinary, the true problem lies in the bigger picture. Tesco are indeed right that the competition system needs reform by the coalition government. This is a process that is already underway and should take effect in a year or so.

Our research and campaign of the past three years has highlighted that the OFT presently appears to be unable to integrate public interest factors into their analysis and decisions – even though this was the original intent of parliamentarians introducing competition law reform back in 1997/8. Whether the supermarkets acted collectively or unilaterally to increase prices at the farm gate, the reality is that UK dairy farmers were demanding price increases to survive and they had broad public support for a fairer deal.

It is now vital that new competition legislation provides a framework for the OFT’s successor body to balance public interest factors, supported by guidance, tools and ways of working with government departments expert in specific areas. There is now support for change from the Prime Minister and across the party political spectrum. The Food Ethics Council rightly say: “The UK government should work with the OFT and consumer groups to develop publicly accountable mechanisms whereby businesses can collaborate to make progress on sustainability that is in the public interest.” Without this action, improved coregulation and responsible business practice will continue to be stiffled.

Yours sincerely,

Andrew Dakers
Founder, The Cooperatition Incubator – www.cooperatition.org

First Responsibility Deals reveal weaknesses in competition law framework

August 12th, 2011

Two recent pieces of media coverage questioning the effectiveness of the present design of Responsibility Deals/ voluntary agreements are worth reading.

A story that headlined the Daily Mail on 1 August 2011 revealed how the usage of plastic bags has once again start to rise despite the WRAP-coordinated Responsibility Deal.  In follow-up Marks & Spencer acknowledged on 9 August that charging for plastic bags was the only effective way of tackling the problem.  However as our Plastic Bags case study explains, under the present competition law framework supermarkets can only co-ordinate on charges, and their timing, if an exception is made by the Competition Minister at BIS.   The 2008 Defra-led Impact Assessment (see pages 103-4) sets out why the Competition minister needs to use his powers.  Alternatively legislation will be required, which would miss out on benefits available through business cooperation, such as increased flexibility of solutions and drawing more fully on businesses’ on-the-ground knowledge.

In the same week, criticism has also been mounted in the BBC’s Panorama programme ‘Dying for a drink’ regarding the effectiveness of the Public Health Responsibility Deal and government advisory groups.  Again many of the complaints come back to pricing controls and the present inability of the coregulatory initiative to use this tool.

Consultation response: ‘A competition regime for growth – A consultation on options for reform’

June 14th, 2011

Dear Mr Lawson,

We are 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 (CMA); Q.19 The Government seeks your views on appropriate objectives for the 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 with the specialist skills to balance public interest factors, supported by guidance, tools and ways of working with other government departments, should be a core objective and function of the new CMA – potentially embedded in statute. The advantages and disadvantages of this unit’s recommendations being approved by a minister or an official should be further examined.

The CMA should focus on competition, but also have the capability as described to balance public interest factors, particularly in the case of sector wide voluntary or co-regulated agreements where positive social and environmental impact could be gained. The new approach 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’.

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 Prime Minister’s commitment was in response to a Business in the Community consultation of 500+ businesses which identified this area as warranting further investigation in order to scale up business engagement in communities. The approach set out above would also provide the certainty 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 self-regulation/ collaboration on environmental and social issues is required.

In response to the Prime Minister’s call last December, Business in the Community and The Cooperatition Incubator look forward to continuing to work in partnership with the Department for Business, Innovation & Skills and the Office of Fair Trading in the months ahead to better understand and resolve this barrier to business action on social and environmental issues.

Yours sincerely,

Charlotte Turner, Director of Research, Business in the Community – www.bitc.org.uk
Andrew Dakers and Tom Linton, The Cooperatition Incubator – www.cooperatition.org

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.

THE PROBLEM

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.

A WAY FORWARD

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.

Cameron acknowledges need to address competition law issues at BITC AGM

December 3rd, 2010
The Prime Minister David Cameron said at yesterday’s BITC AGM and Leadership Summit: “I get the message loud and clear, and we will do everything we can to tackle those barriers head on – whether it is the red tape you face …whether it is being able to collaborate as businesses without having the competition authorities throwing you in jail. I understand the barriers. We are going to work with you to get rid of them.”

This was in response to the business challenge presented by Sir Stuart Rose off the back of BITC’s latest member research (pg 6):
Competition law
A perceived barrier to greater business collaboration is where business feel it could be deemed anti-competitive to come together to discuss some of the core sector wide issues, even when this could have a powerful social or environmental impact.

Often there is felt to be insufficient commercial advantage for one organisation to take the lead. Business leaders suggest creating neutral cross-sector environments for companies to come together without fear of reprimand under competition law, enabling more companies to take significant steps towards greater engagement.

“70% of business leaders surveyed say it is important that government removes the red tape associated with businesses collaborating on the impacts of their core business.”

Today’s FT reports“Rules that prevent welfare claimants from taking part-time jobs or longer work placements should be eased, business leaders said, along with competition laws that prevent businesses from collaborating on sector-wide initiatives… Mr Cameron pledged to “tackle these barriers head on””

Unthinkable?: Competition, for what’s it worth

October 16th, 2010

The price tag is the current system’s alpha, its omega and everything in between

Editorial in The Guardian, 16 October 2010:

“In a week of quaking quangos, the world of commerce has eyes for only two – the Competition Commission and the Office of Fair Trading, two bodies set to be amalgamated in the name of efficiency. The pink pages buzz with debate about whether the move amounts to the merging of judge and prosecutor, and about whether big firms will find ways to sideline a streamlined system. These are important, if prosaic, questions, but the re-engineering of the architecture of competition enforcement ought also, surely, to be a moment to reconsider some of the competition rules. These rules bite on every corner of community life, from the corner shop to the pub, with the latest in a line of verdicts concerning the pricing of a pint being handed down just this week. The current system has certainly driven down costs for the consumer, but the price tag is its alpha, its omega and everything in between. There is no place in the rules for the tinkle of the bell at a much-loved local bookshop or the pride in a high street that looks distinctive, yet people value these things. That is why community resistance campaigns – such as the one that Tesco has just overcome at Sheringham – are routinely sparked by applications from the big stores. The Red Tory Phillip Blond has led the calls for a rethink, and Ed Miliband spoke up for diverse retail in his Labour conference speech. Left and right must now come up with practical plans to replace rigid rules, which know the price of everything and the value of nothing.”